Fiscal Cliff follies in DC - news and views - updated through Dec 3rd !

http://www.zerohedge.com/news/2012-12-01/fiscal-cliff-not-slope-and-3-fs-american-policy-making

http://hotair.com/archives/2012/12/03/boehner-counterpunches-obamas-cliff-offer/

Boehner counterpunches Obama’s cliff offer

POSTED AT 4:21 PM ON DECEMBER 3, 2012 BY ERIKA JOHNSEN

  

Last week, the White House tried (or at least, tried to appear like they were sincerely trying) to grease the skids on the fiscal cliff negotiations with a proposal that included $1.6 trillion in new taxes and the virtual elimination of the debt ceiling — a proposal to which Republicans responded with open laughter.

On Monday, the House GOP counter-offered their own jumping-off point, calling for $800 billion in new revenue via tax-code reform and spending cuts and entitlement reforms that would trim off a couple trillion from the budget. Looks like Mary Katharine and Guy Benson came pretty close to calling it, with some variation. Via The Hill:

House Republican leaders have made a counteroffer to President Obama in the fiscal cliff negotiations, proposing to cut $2.2 trillion with a combination of spending cuts, entitlement reforms and $800 billion in new tax revenue.

The leaders delivered the offer to the White House on Monday with a three-page letter signed by Speaker John Boehner (R-Ohio), Majority Leader Eric Cantor (R-Va.), and four other senior Republicans, including Rep. Paul Ryan (R-Wis.), the party’s just-defeated vice presidential nominee.

Republican officials said the offer was based on a proposal outlined by Erskine Bowles, the former chief of staff to President Bill Clinton, in testimony last year before the congressional “supercommittee” on deficit reduction. That offer is distinct from the widely-cited Simpson-Bowles deficit plan released two years ago.

And, in Boehner’s own words:

With the fiscal cliff nearing, our priority remains finding a reasonable solution that can pass both the House and the Senate, and be signed into law in the next couple of weeks.  The best way to do this is by learning from and building on the bipartisan discussions that have occurred during this Congress, including the Biden Group, the Joint Select Committee, and our negotiations leading up to the Budget Control Act.

For instance, on November 1 of last year, Erskine Bowles, the co-chair of your debt commission, presented the Joint Select Committee with a middle ground approach that garnered praise from many fiscal watchdogs and nonpartisan experts.  He recommended that both parties agree to a balanced package that includes significant spending cuts as well as $800 billion in new revenue.

Notably, the new revenue in the Bowles plan would not be achieved through higher tax rates, which we continue to oppose and will not agree to in order to protect small businesses and our economy.  Instead, new revenue would be generated through pro-growth tax reform that closes special-interest loopholes and deductions while lowering rates.  On the spending side, the Bowles recommendation would cut more than $900 billion in mandatory spending and another $300 billion in discretionary spending.  These cuts would be over and above the spending reductions enacted in theBudget Control Act.

This is by no means an adequate long-term solution, as resolving our long-term fiscal crisis will require fundamental entitlement reform.  Indeed, the Bowles plan is exactly the kind of imperfect, but fair middle ground that allows us to avert the fiscal cliff without hurting our economy and destroying jobs.  We believe it warrants immediate consideration.

If you are agreeable to this framework, we are ready and eager to begin discussions about how to structure these reforms so that the American people can be confident that these targets will be reached.

As Jim Pethokoukis points out, by the White House’s own calculations, $800 billion is in the ballpark of doable:

Consider the example of a $25,000 cap on itemized deductions, which some claim would raise in the range of $1 trillion or more from high-income households:

1. Limiting the cap to those with incomes over $250,000 leaves only $800 billion in revenue. A $25,000 cap that applied to all households would raise taxes by an average of $2,400 on 17 million households with incomes below $250,000 ($200,000 for singles). Treasury estimates show that about 40 percent of the revenue from such a cap would come from these households. Thus, the amount of revenue that could be raised from taxpayers making more than $250,000 is only about $800 billion.

The Democrats have been insisting that major entitlement reform is not on the table, and their desire to notgo over the fiscal cliff is becoming highly suspect. They’ve been rabble-rabble-rabbling about how Republicans need to introduce a concrete negotiating platform of their own, so here it is, and Republicans have now officially outlined the specific concessions they’re willing to make on increasing revenue (which is, by the way, a huge concession in and of itself that Democrats have hardly deigned to notice). Will they finally come to the table in good faith?

Update: I’m going to further ponder my own exit question here — Guy Benson has more on the politics of it all, and as he points out, the Republicans need to get crackin’ on getting the media to sit up and take notice. They’ll have to come in loud and clear that they’ve produced a mature, serious plan that has something for everybody, avoiding both the fiscal cliff and the extent of economic damage that we’d see with Obama’s plan — so the Democrats can feel free to quit pointing fingers any time now.

http://news.firedoglake.com/2012/12/03/boehners-counter-offer-how-about-the-ryan-budget-bowles-simpson-help-me-out-here/

Boehner’s Counter-Offer: How About the Ryan Budget? Bowles-Simpson? Help Me Out Here!
By: David Dayen Monday December 3, 2012 2:51 pm	Tweet1

John Boehner delivered a letter to the White House today about the fiscal slope, and I just find it to be weird. He starts off by calling the events of November 6 a “status quo election” where the American people expect a “fair middle ground” on fiscal issues (the fact that House Democrats got more votes than House Republicans, and could have taken the chamber but for factors like gerrymandering, didn’t enter into this). He then says that Republicans “presented (the White House) with a balanced framework of spending cuts and new tax revenue. Nobody has seen this and the White House has repeatedly said that Republicans have not presented them with anything specific.
Then, Boehner laments the terrible partisanship of the Geithner proposal, which he frames in ways favorable to the Republican position. He says that the spending cuts in last year’s debt limit deal should not count toward total deficit reduction, saying this “confuses the public debate.” So those spending cuts, $1 trillion strong, have vanished, and don’t count toward a $4 trillion goal (neither do war funding savings, even though they were included in the Ryan budget). Boehner also criticizes the inclusion of new stimulus in the package, despite the clear need for more work toward economic recovery.
Then there’s this curious line: “If we were to take your Administration’s proposal at face value, then we would counter with the House-passed Budget resolution.” Boehner proceeds to… propose the House-passed Budget resolution. That’s the one that includes the end of Medicare as we know it into a premium support program, the block-granting of Medicaid and food stamps, and massive layoffs and pay cuts for federal employees.
After introducing this into the debate, Boehner says, putting on his moderate face, that given the status-quo election, it would be unwise to propose these “absolutely essential” reforms that he just spent a full page describing in detail. This represents Boehner trying to be seen as the more reasonable actor in this debate. So after determining the essential nature of these social insurance slashes, Boehner drops them.
Then he casts about for off-the-shelf solutions to get through the fiscal slope. He name-checks the “Biden group” (which worked on cuts prior to last year’s debt limit deal), the Boehner-Obama discussions right before the debt limit deal, and the Super Committee. All of these failed miserably and came to no resolution, so then Boehner goes into left field and pulls out Bowles-Simpson.
He repeatedly calls this the “Bowles plan,” emphasizing the participation of the Democrat, rather than Republican Alan Simpson. He’s actually referring to a different plan put forth by Bowles in 2011. Boehner’s conception of the “Bowles plan” is very different from what Bowles-Simpson actually does. For one, Bowles-Simpson assumes that top marginal tax rates go up. But Boehner says specifically that new revenues in this plan, which totals $800 billion over ten years, “would not be achieved through higher tax rates, which we continue to oppose.” Instead, he endorses a concept of adding $800 billion through “pro-growth tax reform” that closes loopholes and deductions “while lowering rates.” So Boehner is still offering the ROMNEY plan as his counterpoint tax plan, where rates are lower and deductions are closed. The only difference is that it’s mildly revenue-positive, at $800 billion, rather than revenue-neutral.

On top of that, Boehner wants $900 billion in cuts in mandatory spending and $300 billion in discretionary spending. This actually equals the total spending cuts in the sequester, though almost all of those come out of discretionary spending rather than mandatory. Boehner doesn’t specify any of these cuts.
Boehner calls this plan an imperfect, “fair middle ground,” and asks that they begin work on it right away. It’s only $2 trillion in total deficit reduction, but if you add the $1 trillion in previous cuts through the spending cap and $1 trillion in war funding savings, you get to $4 trillion.
Dan Pfeiffer, on behalf of the White House, immediately rejected this:

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. Their plan includes nothing new and provides no details on which deductions they would eliminate, which loopholes they will close or which Medicare savings they would achieve. Independent analysts who have looked at plans like this one have concluded that middle class taxes will have to go up to pay for lower rates for millionaires and billionaires. While the President is willing to compromise to get a significant, balanced deal and believes that compromise is readily available to Congress, he is not willing to compromise on the principles of fairness and balance that include asking the wealthiest to pay higher rates. President Obama believes – and the American people agree – that the economy works best when it is grown from the middle out, not from the top down. 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 our nation needs.

Harry Reid emphasized the inclusion of the Romney plan and the lower tax rates it envisions, saying it would “force middle class families to pay higher taxes.” And in fact Bowles himself disavowed his 2011 plan, arguing that “circumstances have changed.”
So basically, we’re nowhere. But we’re at least setting out the terms of the discussion. The Boehner offer just replaces the sequester with different cuts and raises $800 billion in taxes. The White House offer replaces the sequester with different cuts (actually less cuts), adds stimulus, and raises $1.6 trillion in taxes. And the debt limit, which Boehner did not address at all, still sits there in the middle of the debate. We have a bit of clarity – Republicans want lower tax rates, for one – but still a rather large impasse.

and.....

http://hotair.com/archives/2012/12/03/white-house-reponds-to-gops-counteroffer-sorry-wrong-number-not-going-there/

White House reponds to GOP’s counteroffer: Sorry, wrong number, not going there

POSTED AT 6:01 PM ON DECEMBER 3, 2012 BY ERIKA JOHNSEN

  

Despite Republicans’ significant concession that they would be amenable to revenue increases if they came via tax-code reform — an honest-to-goodness effort at compromise — President Obama has roundly refused to even consider a plan that doesn’t include tax-rate increases on the wealthy, the only apparent policy rationale being that it’s just that important to him to be a full-on class warrior. It looks like the White House is sticking to that line, even after Speaker Boehner officially released the GOP’s own proposal earlier this afternoon. So much for “negotiation,” via BuzzFeed:

“The Republican letter released today does not meet the test of balance,” Pfeiffer said. “In fact, it actually promises to lower rates for the wealthy and sticks the middle class with the bill. Their plan includes nothing new and provides no details on which deductions they would eliminate, which loopholes they will close or which Medicare savings they would achieve.” …

Pfeiffer continued:

Independent analysts who have looked at plans like this one have concluded that middle class taxes will have to go up to pay for lower rates for millionaires and billionaires. While the President is willing to compromise to get a significant, balanced deal and believes that compromise is readily available to Congress, he is not willing to compromise on the principles of fairness and balance that include asking the wealthiest to pay higher rates. President Obama believes – and the American people agree – that the economy works best when it is grown from the middle out, not from the top down. 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 our nation needs.

Uh, not balanced? What the heck type of scales are they using? Ohhh, that’s right, the “fairness”/ “my way or the highway” scales. Are they really not going to move from their original demand-for-surrender and walk toward the GOP even a tiny bit? Like Keith Hennessy wrote in today’s WSJ, it’s starting to feel a lot like President Obama just can’t take yes for an answer:

Mr. Obama says reductions in ObamaCare spending are out of the question, and Congress must now agree to at least $50 billion in new stimulus spending next year. The debt limit must be permanently increased without accompanying spending cuts.

By contrast, House Speaker John Boehner and Senate Minority Leader Mitch McConnell have offered on behalf of Republicans a significant concession in an attempt to close the negotiating gap. Mr. Boehner and Mr. McConnell propose to accept higher taxes on the rich as long as government spending is cut significantly and incentives to work and invest are not weakened. That way, higher taxes and entitlement-spending cuts would reduce future deficits, not finance even bigger government as the president proposes.

Unfortunately, it appears that President Obama cannot take yes for an answer. Republican leaders have shown him a legislative path to lock in his top policy priority with a strong bipartisan vote. Their proposal splits their own caucus, yet still the president refuses because he thinks he can get even more.

And, of course, Senate Majority Leader Harry Reid quickly followed suit with the White House’s statement:

“To protect millionaires, Speaker Boehner’s offer would force middle class families to pay higher taxes. Raising taxes on the middle class is bad policy and flunks the test of balance. To protect the middle class while reducing the deficit, simple math dictates that tax rates must rise on the top two percent of taxpayers next year. The sooner Republicans grasp that reality, the sooner we can avoid the fiscal cliff.

“Democrats are willing to compromise, but any agreement must protect the middle class. We have also been clear that we have no intention of kicking the can down the road. Not only does Speaker Boehner’s proposal delay revenues into 2013, it sets up another destructive fight over the debt ceiling first thing next year.

Simple math, really? Because, as Jen Rubin explains, the Republicans’ plan would do far more in terms of balanced deficit-reduction that the president’s proposal:

A House leadership aide told Right Turn that “the GOP offer includes more deficit reduction than the White House offer last week, which included hundreds of billions in new stimulus’ spending. Our net deficit reduction is $2.2 trillion, but if we were to utilize White House schemes to count (1) previously-enacted Budget Control Act savings, (2) a war savings gimmick, and (3) further interest savings, our proposal would result in $4.6 trillion in deficit reduction savings, much more than theirs.”

So we have the potential for a deal that is somewhere between Bowles’s plan last year and the president’s plan.

That certainly was a quick and hard-line response from the White House — kinda’ like they already knewwhat they would say, no matter what the Republicans put on the table. If I didn’t know any better, I’d say that…

“I think the president is increasingly showing his hand that he is comfortable going off the cliff,” Barrasso tells THE WEEKLY STANDARD, in response to a question about President Obama’s negotiation strategy. “He’s not involving Republicans in the process. He was playing golf this weekend with Bill Clinton, Ron Kirk, and ex-DNC chair Terry McAuliffe. He’s not seeming to be one to work together. He seems to be lecturing more than listening. And I just think that it’s increasingly clear he’s comfortable going off the cliff.”

On The Fiscal 'Cliff' (Not 'Slope') And The 3 'F's Of American Policy-Making

Submitted by Tyler Durden on 12/01/2012 21:15 -0500

• Barclays
 
• Debt Ceiling
 
• Gross Domestic Product
• Recession
 
• recovery
 
• Timothy Geithner

Some policymakers (and commentators) are attempting to make a molehill out of a mountain; seemingly less worried about the outcome of negotiations in the short-term, as they believe the cliff is not a cliff, but more of a slope, since economic damage will initially be limited while any equity market sell-off will only spur a resolution. We tend to side with Barclays and BofAML that the full set of expiring measures constitutes a cliff, not a slope. In brief, here is why - automatic withholdings and in Geithner's words "no authority to delay the process." The extent to which households can buffer this higher withholding is significantly weak as recent 'savings' rates have plunged - implying a need to draw on liquid assets to smooth any consumption shortfall. Citing Winston Churchill, BofAML sums up the siutation well - "You can always count on Americans to do the right thing - after they have tried everything else," and we remain stoic that stock market weakness and severe outside criticism will be important in forcing any agreement, as the politicians appear to face six signficant hurdles ahead.

It seems to us like we are following the same path as last year's debacle - what we like to call the Three 'F's of Fiscal Policy in America... Fear, Faith, and Oh F##K!!

Via Barclays:

Given the tight legislative calendar and the two parties’ gaping differences of opinion, we see a strong possibility that policymakers will “go over” the cliff, raising questions about how quickly a resolution can be reached before serious damage is done to economic activity and financial markets.

Some policymakers appear less worried about this outcome since, in their view, the cliff is not a cliff, but more of a slope, meaning economic damage will initially be limited while any equity market sell-off will only spur a resolution.

Our view is that the full set of expiring measures constitutes a cliff, not a slope. Although the full $650bn drag does not go into effect in January and will instead be phased in over the year, about $500bn of the total relates to revenues. Automatic withholding will begin to rise in January and Treasury Secretary Timothy Geithner has said his department has no authority to delay this process. Thus, additional withholding at a rate of about $40bn per month from higher marginal income tax rates, a higher payroll tax, and the alternative minimum tax (AMT), among other items, clearly point to a cliff in the BEA’s national income accounts (Figure 4).

The extent to which activity is buffered from higher withholding depends on households’ ability to smooth consumption. We believe households have limited room to maneuver. Personal saving in Q3 averaged $445bn (saar), about $100bn below the 2010-11 average and similar in size to expiring revenue provisions, suggesting households would need to draw on liquid assets. Moreover, saving is not evenly distributed throughout the population and tighter credit standards would likely limit many households’ access to credit.

Via BofAML:

Winston Churchill famously said“You can always count on Americans to do the right thing—after they have tried everything else.” This certainly seems to be the case with the fiscal cliff. Politicians have given themselves an almost impossible task. Consider the challenges:

1. The election has returned the same cast of characters who created the cliff. Both parties need to do a 180-degree turn to compromise.
2. The gap between the two parties in terms of both interpersonal relations and policy views is arguably the widest in modern history.
3. They need to reach a deal by year end. And yet, in the first three weeks after the election there was just one brief meeting.
4. The cliff involves 10 large and complex policy decisions: the Bush tax cuts and the sequester are only one-third of the cliff.
5. Every recent major fiscal decision has gone to the last minute, with many false signals of a deal along the way.
6. 1. The debt ceiling hits shortly after the cliff. If it is not raised, the resulting austerity is more draconian than the whole fiscal cliff.
   
   
   Our baseline forecast assumes along, painful decision process followed by significant fiscal austerity. We expect a partial deal in late December where the two parties agree on some items and postpone others for several months. By the spring we expect all of the cliff items to be resolved and for there to be a process in place for negotiating entitlement and tax reform. We expect austerity equivalent to about 2% of GDP to kick in over the course of the first two quarters of the year (Table 2). We think stock market weakness and severe outside criticism will be important in forcing an agreement.
   
   
   Some pundits dismiss the economic damage from the cliff. One view is that it will be resolved at the last second and the markets will quickly realize it was a nonevent. This ignores the fact that, unlike past brinkmanship moments, the cliff ends with significant fiscal tightening. Others argue that the fiscal cliff is really a fiscal slope: it will take time for austerity to impact the economy and people will largely ignore any tax increases or spending cuts because they will “know” they are temporary. This ignores the large and growing uncertainty shock from the cliff.
   
   
   There has already been some belt tightening. The OECD estimates the structural deficit has already been shrinking by about 1.3 pp per year as federal stimulus fades and state and local governments cut. Assuming some slowing in cuts at the state and local level and our baseline for federal fiscal policy, the fiscal shock roughly doubles to about 2.5 pp in 2013. That’s a big hit for an economy that has had average growth of 2.2% since the recession ended back in 2009.
   
   

   The cliff shock will likely rotate through the economy.Business leaders have already cut capital goods orders in anticipation of the cliff, but once the cliff is resolved we expect the release of some pent-up demand for capital. By contrast, households seem to be oblivious to the cliff. However, with the cliff now moving from business to front page news, we expect consumption to cool. Moreover, the tax increases and transfer cuts from the fiscal cliff will likely cut 1.9 pp off of income, stopping the growth in real disposable income in 2013.

   
   

   In our base case, once the cliff is resolved, the economy will return to its moderate recovery. There has been substantial healing in the private sector since the 2008-09 crisis, and we are particularly encouraged by the housing healing. In other words, the 50 states are fine; the District of Columbia is the problem.
   
   
   
   

http://globaleconomicanalysis.blogspot.com/2012/12/stalemate-obama-warns-of-prolonged.html

Saturday, December 01, 2012 9:56 AM

Stalemate: Obama Warns of Prolonged Talks as Republicans Rebuff Plan

The word of the day is "stalemate".

Last year the Republicans had a chance to accept spending cuts to tax hikes at a 10-1 ratio. They declined. Now president Obama does not want to bargain. Who can blame Obama (except Republicans)? We may disagree, but that is part of the platform that got him elected.

The Republicans do not want to bargain either. And who can blame them (except Democrats)?

Regardless, Republicans blew a golden opportunity last year and that chance is gone. Obama has the upper hand now, and nothing will change that setup.

I certainly am opposed to tax hikes without something substantial in return.

Yet, if Obama holds his ground, the only way to have some cuts across the board right now is for the fiscal cliff to happen. 

Could it be that the best political outcome may actually be the dreaded "fiscal cliff"? The fiscal cliff will hit military spending but why shouldn't it? The US could easily defend itself on half its current budget actually.

While pondering those questions and thoughts, please consider Obama Warns of Prolonged Talks as Republicans Rebuff Plan. 

 President Barack Obama and House Speaker John Boehner stood their ground with opposing plans to avert the fiscal cliff and warned there was no quick path to a solution.

Obama has proposed a framework that would raise taxes immediately on top earners and set an Aug. 1 deadline for rewriting the tax code and deciding on spending cuts, according to administration officials.

It calls for $1.6 trillion in tax increases, $350 billion in cuts in health programs, $250 billion in cuts in other programs and $800 billion in assumed savings from the wind-down of the wars in Iraq and Afghanistan, according to the officials, who asked for anonymity.

Boehner said less than 30 minutes later during a news conference at the Capitol in Washington, that the proposal, presented to congressional leaders by Treasury Secretary Timothy F. Geithner, did nothing to move talks along.

“There’s a stalemate, let’s not kid ourselves,” he said.

Stalemate Solution

The stalemate "solution" comes with its own set of problems.

Contrary to popular belief, the risk is not that too much is done, but rather that both sides unwind nearly the entire "fiscal cliff", achieving no budget reductions at all.

Speaking of which, it's high time we "stop kidding ourselves" about what is happening. There are no budget cutbacks at all under discussion. Rather the discussion centers around reductions in assumed increases, and politicians are having a tough time even with that.

Mike "Mish" Shedlock



and....


http://hotair.com/archives/2012/11/30/obama-were-going-to-have-a-really-scrooge-christmas-if-congress-doesnt-do-what-i-want/

Obama: We’re going to have a really “Scrooge Christmas” if Congress doesn’t do what I want

POSTED AT 4:21 PM ON NOVEMBER 30, 2012 BY ERIKA JOHNSEN

  

Do you think the President maybe kind of misses campaigning? Because, instead of actually just sitting down, maybe locking himself in a room with other top lawmakers, and doing the tough work of negotiating out a fiscal-cliff compromise, President Obama is going back to doing what he does best. Turning to his supporters to try and concentrate public pressure on Washington to get a deal made, the president made a very campaign-style stop at the K’NEX factory in Philadelphia.

“This is not some run-of-the-mill debate. This isn’t about which political party can come out on top in negotiations. We’ve got important decisions to make that are going to have a real impact on businesses and families all across the country,” the president said.

“I’ve been keeping my own naughty and nice lists for Washington. So you should keep your eye on who gets K’NEX this year,” he quipped. “There are going to be some members of Congress who get them, and some who don’t.” One day after the fiscal cliff talks between the White House and House Republicans took a turn for the worse, the president admitted there are going to be “some prolonged negotiations” to get the deficit under control because “you know, in Washington, nothing’s easy.”

“We’ve got some disagreements about the high-end tax cuts, right?” he said of his insistence on raising taxes on the top 2 percent as part of a broader deficit reduction deal. “That’s a disagreement that we’re going to have and we’ve got to sort out. But we already all agree, we say, on making sure middle-class taxes don’t go up. So let’s get that done. Let’s go ahead and take the fear out for the vast majority of American families so that they don’t have to worry about $2,000 coming out of their pockets starting next year.”

I’m not sure how doing the exact same thing the president has been doing for months (years, really) is supposed to help the situation move along, but it’s okay, because he’s got his aides back in Washington on the case — making laughable proposals like $1.6 trillion in new taxes and an end to the debt ceiling, in exchange for… promising to talk about entitlements later. Yes, because a promise to ‘talk about it later’ has such a great track record at problem-solving with the federal government.

Just after the president’s appearance, House Speaker John Boehner gave his take on the situation, the nutshell version of which is: Stasis. So much stasis. Via the NYT:

“There’s a stalemate. Let’s not kid ourselves,” he said. I’m not trying to make this more difficult. If you’ve watched me in the last three weeks I have been very guarded in what I have to say. I don’t want to make it harder for me or the president or members of both parties to be able to find common ground.”

“Right now, we’re almost nowhere,” he concluded.

Mr. Boehner also declared Mr. Obama’s plan unacceptable. But he did not offer a counterproposal. Instead, he decried what he called a lack of seriousness and leadership on the part of the president.

“Republicans are not seeking to impose our will on the president. We are seeking a bipartisan solution that can pass both houses of Congress and can be signed into law by the president in the coming days,” he said.

and.....


.

http://hotair.com/archives/2012/11/30/should-republicans-put-forth-simpson-bowles/

Should Republicans put forth Simpson-Bowles for the fiscal cliff?

POSTED AT 7:19 PM ON NOVEMBER 30, 2012 BY MARY KATHARINE HAM

  

My friend Guy Benson and I were talking about this idea the other night, and I liked it when compared to all our other dismal options. It was also the same night we saw “Lincoln,” so I wondered if we were high on celluloid optimism about what’s possible in politics.

But Guy fleshed out the idea in this must-read post today, and I think he’s onto something. You should go over there to read the whole thing, but here’s the gist:

Of the commission’s 18 members, six Democrats and five Republicans endorsed the final document, while the seven ‘no’ votes split four-to-three along Left/Right ideological lines. Paul Ryan was the most prominent opponent of the plan. The eleven-member ‘yes’ camp was ideologically diverse, ranging from Sen. Tom Coburn on the right to Sen. Dick Durbin on the left. Like many conservatives, I continue to harbor significant concerns about various elements of the plan. I’m troubled by some of the tax provisions, especially the revenue cap at 21 percent of GDP (far higher than the historical average of 18 percent). The defense cuts are also worrisome, as is the fact that despite some cuts and tinkering, Medicare — the largest long-term driver of our debt — escapes a desperately needed overhaul. The framework also assumes the retention of Obamacare, which Paul Ryan has cited as a primary cause of his ‘no’ vote. But here is today’s reality: (1) Unhappy tax news is coming, one way or the other. The president is not budging. (2) The fall election guaranteed that Obamacare is here to stay, at least for the foreseeable future. (3) Sequestration’s defense cuts would be even more punishing and abrupt than Simpson/Bowles reductions. (4) Democrats have shown themselves to be totally unserious about any reforms or reductions to entitlements. In short, even if the major players manage to hammer out an eleventh-hour deal before January 1, it’s probably going to reek. It will have been negotiated in secret, and will almost certainly be jammed through in a rushed and unsavory fashion. This is no way to govern.

Simpson-Bowles, for all its faults, was conducted in an open and transparent manner and brought disparate political players into a room to forge a serious compromise. It overhauls and streamlines our byzantine tax code, takes some important first steps on entitlements, and reduces and caps federal spending. On substance, I’d wager that it would be considerably better than anything Obama and Boehner might produce after weeks of behind-closed-doors acrimony with the proverbial gun to their heads. Politically, it paints Democrats into a tough corner. Republicans could make a grand show of reluctantly supporting Simpson-Bowles for the betterment of the country. Ideally, the press conference would be led by Paul Ryan, who might explain why he voted against the plan as a commissioner, but is now willing to set aside some of his strong ideological preferences to move the nation forward. They would remind viewers that the proposal they’re now backing only exists because President Obama specifically and publicly asked for it. Plus, more Democrats than Republicans voted for it, including Harry Reid’s top lieutenant in the Senate. Put simply, Simpson-Bowles represents the very embodiment of bipartisan collaboration and problem solving — precisely the sort of thing “moderates,” the media, and the public are always demanding. It would be exceedingly difficult for Democrats to paint the plan as radical or draconian in light of the commission’s origins and participants. The GOP’s “party of no” problem would also be hugely diminished; after all, they would have just signed on to the president’s commission, with the previously recalcitrant Paul Ryan magnanimously leading the way. It would be fascinating to watch the president and his allies try to denounce and reject the very proposal he called for.

There are things I don’t like about Simpson-Bowles, though I’ve never been a hater. I think the country would have benefited if President Obama had ever shown enough leadership to address some of its recommendations, and said so on “The O’Reilly Factor” in January 2011. Despite its faults, it comes closer to reckoning with our real problems than Obama ever has. There are other plans I would like more than Simpson-Bowles. But here’s the thing. Simpson-Bowles is far more responsible than what President Obama is currently offering and probably far better than a slapped together grand bargain made by Obama and Speaker Boehner behind closed doors as a deadline closes in. It was created in a more transparent process, and though it certainly focuses more on revenues vs. spending than I’d like, it gives Republicans some of the trade-offs they’re hoping for in a deal with Obama— some simplification of the tax code, some entitlement reform, a cap on spending as a percentage of GDP.

It is also a fully formed plan with on-the-record bipartisan support and near-universal acceptance as “reasonable” and “sober” by the media and Beltway types. A lot of that is lip service from folks who felt rather certain the plan would never be seriously considered, but it still makes it hard to frame Republicans as obstinate obstructionists when they offer up the plan of none other than Mssrs. Simpson and Bowles. On the other hand, liberals hate it. Paul Krugman:

So, a public service reminder: Simpson-Bowles is terrible. It mucks around with taxes, but is obsessed with lowering marginal rates despite a complete absence of evidence that this is important. It offers nothing on Medicare that isn’t already in the Affordable Care Act. And it raises the Social Security retirement age because life expectancy has risen — completely ignoring the fact that life expectancy has only gone up for the well-off and well-educated, while stagnating or even declining among the people who need the program most.

Cue the Democratic infighting. The president has been avoiding this plan like the plague since his own commission finished it, but it is still his commission. Rejecting it out of hand to allow liberals to continue living in debt denial might be a move so irresponsible as to make even the press notice. Republicans would demonstrate they know the calculus in Washington has changed, but that doesn’t mean they must make a flagrantly irresponsible deal when a more responsible one is available.

This idea got a good reception in the Greenroom, when I half-expected it to get torched, which seems to me an indicator that all-important conservative constituents might not be as opposed to something like this as Republican leaders might think they are. But have at it in the comments, here. I’m anxious to see what y’all think.

In the end, it does seem a more philosophically palatable way to change the course of a very bad political situation. And, in the end, the part that’s really important— I think it’d genuinely be better for the country if something like Simpson-Bowles were to pass instead of us going over the cliff or adopting some terrible deal. Worth a thought.

Exit question (Allahpundit™): Who foretold this? Why, Ed Morrissey, of course.

And, read this great, comprehensive Allahpundit post for a flashback to reaction as Simpson-Bowles was first announced. Pelosi: “Unacceptable.”

Update: In addition to general concerns about the contents of Simpson-Bowles, I should add the very reasonable worry some have voiced in comments at the Greenroom, which is that if you make Simpson-Bowles your opening offer, it just turns into a worse Simpson-Bowles by the time a deal is final. Yep, worries me too. But I think Republicans would certainly be on much more solid negotiating ground touting this plan and saying they’ve done lots of compromising than where they stand now. Thoughts?

Update: Food for thought for the “let it burn” crowd, of which my id is intermittently a member. Howard Dean is, too, because it gives him everything he wants. Yikes.

Update: Please also read Randall Hoven, who did a good, detailed write-up of this idea earlier this week. I had not seen it until it was mentioned in comments, or I would have linked it above.

As it is, Obama can wash his hands of it, saying even the commission itself did not pass it. But if it passes, Obama must own it. If Republican congressmen Paul Ryan, Jeb Hensarling, and Dave Camp would switch their votes, it would be enough to pass that hot potato to the Democrats. They should say, “the people spoke on November 6″ and that they listened to the voice of the American people telling us all to work together, yadda yadda. Then let the Democrats own what comes after.

and.....

http://hotair.com/archives/2012/12/01/hatch-obama-offer-a-classic-bait-and-switch-on-the-american-people/

Hatch: Obama offer a “classic bait-and-switch on the American people”

POSTED AT 2:31 PM ON DECEMBER 1, 2012 BY ED MORRISSEY

  

Orrin Hatch offered today’s Republican response to Barack Obama’s weekly address, and the Senator from Utah wasn’t in a punch-pulling mood.  Venting the anger from the GOP on Capitol Hill after the President’s opening bid on fiscal-cliff negotiations, Hatch called it the equivalent of consumer fraud:

“What [Obama] proposed this week was a classic bait and switch on the American people—a tax increase double the size of what he campaigned on, billions of dollars in new stimulus spending and an unlimited, unchecked authority to borrow from the Chinese,” Sen. Orrin Hatch (R-Utah) said in Saturday’s weekly GOP address.

“Maybe I missed it but I don’t recall him asking for any of that during the presidential campaign. These ideas are so radical that they have already been rejected on a bipartisan basis by Congress.”

I wrote about this earlier in the week.  During the campaign, Obama insisted that he wanted a balanced approach to deficit reduction, and even proposed a cuts-to-revenue ratio of 5:2.  In his convention speech, Obama even made a passing mention of entitlement reform in a second term as a way to control spiraling deficits.  Yet, this was the deal Obama had Tim Geithner deliver this week as an opening bid:

On Thursday, Treasury Secretary Tim Geithner was dispatched to Capitol Hill to share Obama’s plan with House Speaker John Boehner (R-Ohio) and Senate GOP Leader Mitch McConnell (R-Ky.) The deal included $1.6 trillion in tax hikes, $50 billion in economic stimulus spending and $400 billion in spending cuts. Republicans have demanded more severe spending cuts – including entitlement reform – to begin a discussion on raising taxes.

That ratio turned into a 1:4 rather than a 5:2.  Democrats spent yesterday defending the bait-and-switch effort, claiming that Obama was just a good horse trader:

House Minority Whip Steny Hoyer (D-Md.) even went so far as to agree that the president’s proposal looked little different than a Democratic wish list.

But Hoyer also said that was wholly appropriate for an opening bid.

“I don’t think it’s a take-it-or-leave-it offer. I think it is, frankly, responsive to what the Republicans said they wanted, which is a specific offer,” Hoyer added during his weekly press briefing in the Capitol. “That doesn’t mean they have to like the offer. It does mean that they should put a very specific offer back on the table.”

The problem with negotiating under those circumstances is that it’s clear Obama isn’t negotiating in good faith.  In fact, he’s not negotiating at all — he’s campaigning.  Joe Scarborough blasted him yesterday for his hands-off leadership in a crisis of Obama’s own making in substantial part, and unfavorably compared him to Bill Clinton and Newt Gingrich:

The former Florida congressman added that for all their flaws, former House Speaker Newt Gingrich and former President Bill Clinton’s mutual cooperation should be an example to Obama and Boehner.

“It begs the question, really — it’s a question that we have to be asking or at least I’m asking, why is the president in Philadelphia holding a campaign rally instead of sitting behind closed doors, you know, with John Boehner?” Scarborough said. “I keep going back to the 1990s. Who would ever look at Bill Clinton and think — would look at Bill Clinton and Newt Gingrich as the models of, you know, of compromise in the age of impeachment? But those guys did not like each other at the beginning of the process. In fact, they hated each other in ’94.”

“But they spent four years behind closed doors, you know, knocking each other’s heads,” Scarborough continued. “They figured out how to balance the budget together. And they will both say it. The president will say to Gingrich, Gingrich will say to the president, four years in a row for the first time since the 1920s, and the president is flying off today to a campaign rally. I’m rooting for the president. I am. I’m rooting for Boehner. I really am. I want them to all succeed. I want us to avert this crisis. It depresses me, though, the way the president’s team is having him perform on the national stage. I think this is a bad mistake.”

It’s par for the course for Obama, using an analogy I chose very, very deliberately. It works better than the Star Wars analogy.