Wednesday, December 12, 2012

What's actually on the table

Do you remember what many progressives did during the negotiations over health care reform? They focused all their attention on the public option while not noticing things like the Medical Loss Ratios (that limited what insurance companies could spend on administration and profits), the largest expansion of Medicaid in the program's history, the free preventative services that caused so much controversy last year, etc.

I'm beginning to feel like Yogi Berra with a sense of deja vu all over again. Right now it seems like all the left can talk about is whether or not lowering raising of the age for Medicare eligibility will be part of the deal. Meanwhile it feels to me like we are missing both the forest and the trees.

When it comes to the trees, it sounds like the one thing President Obama HAS actually put on the table as part of the current negotiations is corporate tax reform. Part of that proposition is likely a reduction in the tax rate for corporations. But the truth is - with a top rate of 39% - the U.S. currently has one of the highest corporate tax rates in the world. The trouble is...most of the major corporations avoid paying much at all. For example, in 2011, the country's 10 largest corporations paid an average 9%. And so a potential deal would mean lowering the top rate WHILE closing some of the loopholes that allow the biggest companies to avoid paying their fair share. This is a perfect area for President Obama to exploit the failure of Republicans to get into the weeds and actually work on the details. We should be paying attention to that one.

Another item that has gone almost unnoticed is that the Obama administration has taken cuts to Medicaid off the table. Given the program's critical role in Obamacare as well as its impact on the poor and elderly, that is - as VP Biden would say - a BFD.

When it comes to the forest, we've heard several Republican legislators and pundits say its time to give the Democrats a win on the Bush tax cuts and move on to a fight over the debt ceiling once again. But when Senate Minority Leader Mitch McConnell says that's what the party should do - you can practically take it to the bank as the most likely scenario.

Based on what he said last week about an imminent deal, we might have reason to doubt Ezra Klein's reporting. But its still important to note what he has to say about the President's positioning on this one.
The Obama administration is utterly steadfast on this point: They will not suffer a repeat of 2011, when they conducted negotiations over whether the United States should default. If Republicans go over the cliff and try to open up talks for raising the debt ceiling, the White House will not hold a meeting, they will not return a phone call, they will not look at the e-mails. They will move to an entirely public strategy, rallying voters and the business community against the GOP’s repeated brinksmanship...

But even if it doesn’t come to that, the nation’s borrowing limit remains a problem in the ongoing negotiations. For the same reason the White House doesn’t want to negotiate over the debt ceiling in 2013, they don’t want to see it return in 2014, or even 2015. They want the bomb defused, not delayed. And so they’re insisting on a long-term fix in any deal, proposing to, in effect, take responsibility for raising the debt ceiling away from Congress and hand it over to the president. Their proposal is clear: It functionally eliminates the debt ceiling forever. The White House does not believe that lifting the debt ceiling for a year, or even two years, is a reasonable compromise against “forever.”

Boehner and the Republicans don’t want to give up the leverage of the debt ceiling forever, or for 10 years, or even, as John Engler, head of the Business Roundtable and a former Republican governor suggested, for five years. But the White House isn’t very interested in compromising on this issue, as they figure that if there needs to be a final showdown over the debt ceiling, it’s better to do it now, when they’re at peak strength, then delay it till 2014 or 2015, when their own vantage might have ebbed.
This could shape up to the the mother of all battles between President Obama and the obstructionist Republicans. Its the highest of all the high stakes battles we're likely to see waged over the President's two terms. It looks to me like President Obama is ready to fight this one to the end. And we need to have his back on winning because taking the debt ceiling hostage is the most powerful tool the Republicans still have in their arsenal to gut all that we've worked over the decades to build.


  1. In your second graph, did you mean raising the eligibility age for Medicare rather than lowering it?

    Great stuff as usual.


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