Economy & Budget

Fiscal cliff update Dec. 4: Boehner parries

Fiscal cliff update Dec. 4: Boehner parries

The biggest fiscal cliff news of today will probably by the counteroffer on the budget offered late yesterday by House Speaker John Boehner (R-Ohio). The Republican leadership’s plan, which seeks to raise revenues without substantial changes in marginal tax rates, isn’t winning any friends in the White House, but it has put President Obama in the rare position of responding to a GOP proposal rather than criticizing the Republicans for not offering ideas.

Details of the Boehner plan
The best place to read up on the GOP plan is with David Harsany’s breakdown in Human Events. The Boehner plan, Harsanyi reports, raises about half as much revenue as the president’s proposal, reduces some baseline spending, and leaves out any new fiscal stimulus. Elsewhere in Human Events, John Hayward notes the Republican plan’s lack of pro-growth tax reduction, while Gary Hoitsma points to an ominous historical precedent: the budget deal of 1982, when two smiling Irishmen named Ronald Reagan and Tip O’Neill agreed to a “balanced” approach that resulted in actual tax hikes, phantom spending cuts, and ballooning deficits.

Heritage: Six steps to salvation
Heritage Foundation economists J. D. Foster and Alison Acosta Fraser propose six steps toward an actual solution of the fiscal cliff. Ranging from politically improbable to politically impossible, Fraser and Foster’s ideas are nevertheless terrific illustrations of what’s at stake, where the real problems are, and how difficult it will be to solve anything:

  1. Raise the Social Security eligibility age to match increases in longevity.
  2. Correct the cost-of-living adjustment (COLA).
  3. Raise the Medicare eligibility age to agree with Social Security.
  4. Reduce the Medicare subsidy for upper-income beneficiaries.
  5. Phase out Social Security benefits for upper-income retirees.
  6. Consolidate Medicare’s elements and collect a single higher premium.

Bowles: Don’t take my name in vain

While Boehner has been highlighting his plan’s pedigree in the Simpson-Bowles Deficit Reduction proposal, eponymous committee head Erskine Bowles is distancing himself from the Republican scheme. While I’m flattered the Speaker would call something ‘the Bowles plan,’” Bowles writes at his Moment of Truth Project site, “the approach outlined in the letter Speaker Boehner sent to the President does not represent the Simpson-Bowles plan, nor is it the Bowles plan. In my testimony before the Joint Select Committee on Deficit Reduction, I simply took the mid-point of the public offers put forward during the negotiations to demonstrate where I thought a deal could be reached at that time.”

Washington Post: Dems say no, people blame GOP
The Washington Post’s Lori Montgomery notes that the president wasted little time in rejecting the Boehner plan. “The Republican letter released today does not meet the test of balance. In fact, it actually promises to lower rates for the wealthy and sticks the middle class with the bill,” said White House communications director Dan Pfeiffer. “Until the Republicans in Congress are willing to get serious about asking the wealthiest to pay slightly higher tax rates, we won’t be able to achieve a significant, balanced approach to reduce our deficit.” Elsewhere, the Post notes an uncomfortable feature of the talks for Republicans: Polls indicate voters will blame the GOP, not Obama, if the fiscal cliff negotiations fail.

Washington Times: White House plan is too liberal even for Senate Democrats
At the Washington Times, Emily Miller looks at a suggestion from the office of Senate Minority Leader Mitch McConnell (R-Kentucky) that Senate Democrats may not be able to stomach the tax hikes in the plan Obama announced last week. “The Senate Democrats have been noticeably silent since word leaked of Mr. Obama’s demand for $1.6 trillion in new taxes, which is twice as much as he has asked for previously. In fact, the powerful chairman of the Senate Finance Committee, Sen. Max Baucus of Montana, told the Great Falls Tribune that he is working to keep the current death tax levels — 35 percent of estates over $5 million — as opposed to the president’s proposed 45 percent of estates over $3.5 million. Sen. Mary Landrieu of Louisiana backed up Mr. Baucus‘ position last week, telling the Wall Street Journal that she would vote against any final deal that raised the death tax. Sen. Mark Pryor of Arkansas concurred with his colleagues last week.”

National Journal: You could say the same of Republicans
National Journal’s Billy House notes that the Republicans too are facing some coalition problems over Boehner’s offer: “‘Sadly this plan leaves conservatives wanting,’ declared Tim Phillips, president of Americans for Prosperity, the advocacy group partially backed by billionaires David and Charles Koch, in a statement Monday. Meanwhile, Heritage Action, the Heritage Foundation’s lobbying wing, alerted its members in an e-mail: ‘Not only are Republican leaders asking their members to go back on their promise not to raise taxes on the American people, but they appear unwilling to fight for the bold entitlement reforms that won them the House in 2010.’ Such rapid-fire conservative backlash underscores—once again—that the Ohioan and his leadership team face more than a tough fight to reach a compromise with Obama and Democrats to resolve a year-end fiscal crisis.”

Fiscal cliff jokes keep coming
Apparently McConnell isn’t the only one laughing at the White House’s fiscal cliff proposal. Jay Leno suggests rebranding the fiscal cliff to make it more appealing to voters: “Here’s how they should explain it: It’s 4 a.m. for our economy, and Lindsay Lohan is behind the wheel. That says danger. People understand that.” Before giving up the cliff metaphor, however, comedy writers might consult with idle sovietologists to resurrect a howler from the glasnost period: “Before Gorbachev our country was on the brink of a terrible abyss. Now we’ve taken a bold step forward.”

 

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