Debt ceiling deal getting closer

by charvaka Thu Jul 21, 2011 4:50 pm

It's not done until it is all really done, but the contours of a deal are emerging. Looks like Grover Norquist is offering GOP lawmakers a graceful exit out of their "no net revenue increase" pledge by conceding the one thing that the GOP has insisted on for a long time -- perpetuation of the Bush tax cuts for the top 2% income earners. If enough House GOP reps are willing to hold their noses and vote for a deal that includes the elimination of those tax breaks, then we will have a solid package that puts the federal finances on much firmer footing for the rest of this decade. Whether he gets another term of not, Obama will be remembered for his "big deals" -- healthcare, auto industry rescue, Wall Street reform, and deficit reduction.

The Tea Party extremists won't like this one bit, nor will the left-wing extremists who don't want to touch social security and medicare. But overall this should be good for the country.

http://www.nytimes.com/2011/07/22/us/politics/22fiscal.html

by truthbetold Thu Jul 21, 2011 9:16 pm

If Obama could roll back Bush tax giveaways, it would be a major breakthrough. Leaders can agree to something but ordinary republicans rank and file may not vote for it. NY times report seems to suggest some dems may also balk at the one sided agreement that is likely to emerge.

Finally, a little compromise on repub side will have to be compensated with huge entitlement cut. It is ok from the big picture point of view but it will hurt dems in 2012.

by charvaka Thu Jul 21, 2011 9:40 pm

truthbetold wrote:Finally, a little compromise on repub side will have to be compensated with huge entitlement cut. It is ok from the big picture point of view but it will hurt dems in 2012.

Very true. The way I am looking at it, Obama's reelection depends almost 100% on two variables: gas prices and unemployment rate as they stand in Sep-Oct 2012. None of the proposed pieces of debt ceiling negotiations impact either variables in the short run (most cuts they are talking about take effect 2013 on.) I'd rather have a one-term president that accomplishes a lot, than a one-term president who gets gun-shy in the run up to the elections.

Obama has been saying "minor changes" is what he will concede on the entitlement programs. If he makes medicare solvent for another two decades by introducing a means test, I think he will be able to limit the negative impact at the polls. If, OTOH, he gives too much on entitlements, I fully expect Democratic senators to kill the proposal on arrival.

by truthbetold Thu Jul 21, 2011 9:59 pm

"charvaka" " I'd rather have a one-term president that accomplishes a lot, than a one-term president who gets gun-shy in the run up to the elections. "

I hope he takes that approach. His biggest asset so far has been republican inability to provide a candidate that could generate interest and intellectual curiosity. Each candidate seems to be cut from the fear the tea party cloth. It is a sad commentary when people think Bachman is the most interesting candidate of the lot.

If obama really wants to be a leader of significance, he has to stop worrying about next term. Timid approach will make it impossible for him to fight back extreme right wing republican propaganda. A bold initiative will once again raise the hope of 2008.

Economy will rise despite all these problems except for a catastrophic crisis created by repubs. Unemployment will stabilize or reduce by 2012. But the changes may not be enough to prove or proclaim victory. Even if Obama scapes through, dems may lose both houses setting up a non performing govt.

But if Obama stands tall, he may create that 2008 sentiment in dem base, he may be propelled into whitehouse with one fo the houses to support.

by charvaka Thu Jul 21, 2011 10:35 pm

Looks like the Dems' concern is about timing... that the Obama-Boehner plan will legislate cuts but postpone legislation on tax reform to next year. There is no trust that the GOP will hold up its side of such a bargain; if the GOP base revolts and votes against tax reform, we will be stuck with big cuts but no revenue increases. That would be a disaster. Obama better watch out.

by truthbetold Fri Jul 22, 2011 6:16 am

Charvaka: "There is no trust that the GOP will hold up its side of such a bargain;"

Would you blame dems for not trusting repubs in the current state of affairs?

Repubs may not say they are reneging on any promises but they wsill another loopholes or throw another curve or create another obstacle from some angle or some group that will make it impossible to pass tax scale backs.

A bird in hand .....

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