Sunday, July 10, 2011

Why the "grand bargain" failed

Reading this article in the Washington Post this morning, I now see why the "grand bargain" failed. Conventional wisdom will develop that it was because Republicans couldn't accept tax increases. That will be partially right. But it was also bigger than that.

Essentially what I suspect President Obama proposed was the equivalent of Democratic reforms to Medicare, Medicaid and Social Security - along with a guarantee that the Bush tax cuts for the wealthy would be ended. Here's the key paragraph from that article:

Some Republican aides said the deal was simply not good enough, in part because Obama refused to cut entitlement programs deeply enough to restore them to solvency. They also complained that, as part of a mechanism to force lawmakers to overhaul the tax code, the president wanted a trigger that would automatically raise taxes if tax legislation was not enacted by the end of this year.

As far as taxes, the proposal was to affirm the tax cuts for middle class Americans now - thus separating them from the cuts for the wealthy. The later would then expire at the end of this year if there was not significant tax reform. What I'm sure the Republicans understood is that either way, the tax cuts for the wealthy would end. Once they had been de-coupled from tax cuts for the middle class, the worst that could happen is that they end in 2012 (when all the Bush tax cuts are set to expire).

Then there's that line about Obama refusing to cut entitlement programs deeply enough. That's what is going to get lost I'm afraid. We all know that Obama has been totally consistent on this one - we need to reform how these programs are paid for, not cut benefits. That has traditionally been the Democratic position and it stands in stark contrast to the Ryan plan that was endorsed by all Republicans. What this means is that the Republicans also rejected Obama's proposals about Medicare, Medicaid and Social Security. You're not likely to hear that one discussed on those poutrage blogs.

So all Republicans were going to get out of this deal was the rights to brag about reducing the deficit. As we now know, that is not their actual agenda.

No comments:

Post a Comment

The danger of demonizing education

In the aftermath of this election, we're hearing a lot of pundits and politicians suggest that the reason Harris lost is because Democra...