By Daniel Horowitz -
Here are two things to keep in mind with regards to Boehner’s budget offer. First, when you begin negotiations agreeing to 60% of the demands of the other side and fail to offer a bold contrast on the other 40%, you are headed for an outcome that is 80-90% favorable to your opponent. Second, when you need to outsource your budget plan and entire view of government to Democrat Erskine Bowles, you are relegating yourself and your party to irrelevancy.
John Boehner and other House GOP leaders have offered Obama a plan to raise $800 billion in revenue through “tax reform.” I’m not sure how you raise revenue in a static framework without raising taxes, but let’s put that aside for a moment. The $1.4 trillion in savings from the spending side is the real problem. Once again, they fail to offer a bold contrast concerning their view of the role of government.
When you cut through the illusory narrative generated by the media reports of “trillion in cuts,” you’ll realize that not a single program or agency is eliminated, at least not without the creation of a new one in its place. They have not put on the table a plan to eliminate even a few of the 2,184 assistance programs. They certainly have not demanded repeal of Obamacare as a condition of raising taxes.
And speaking of Obamacare, why are Republicans not demanding that the Obamacare tax hikes, the worst part of the fiscal cliff, be terminated as a part of the compromise? While all the focus is on which tax cuts are slated to expire, Republicans have largely failed to communicate to the public that 5 of the 18 Obamacare tax hikes are expected to go into effect at the beginning of 2013. The new taxes include a cap on the Medical Itemized Deduction, a cap on private flexible savings accounts, a 2.3% excise tax on medical devices, a 3.8% surtax on investment income for those earning more than 200k, and a .9% increase in the Medicare payroll tax for the rich. Any willingness of Republicans to deal with Democrats without demanding repeal of the Obamacare taxes is suicidal.
The entire premise behind the negotiations thus far has been 180 degrees antithetical to reality. Instead of putting Democrats on defense for the impending Obamacare tax hikes and for the lack of spending cuts, they have backed themselves into a corner by agreeing to tax increases. Moreover, if they are hell-bent on raising taxes on the top 2%, who already pay almost half the income taxes, why not demand something transformational in return, such as Obamacare repeal or Cut, Cap, and Balance. There are some vague references to a federalist approach to Medicaid reform in Boehner’s plan, as well as a nameless reference to Medicare premium support, there is nothing transformational in this deal that would justify the cave on taxes.
Or…how about the Clinton-era spending rates? Republicans are evidently cowed by the Democrat messaging on returning tax rates to the Clinton-era levels, so why not make a commensurate demand to return to the Clinton-era spending levels? That would necessitate cutting spending from $3.7 trillion to $1.7 trillion. Even adjusting for inflation, the budget would be closer to $2.4 trillion. Instead, the GOP proposal would delay the growth of the federal budget to $4 trillion over the next few years by a year or two.
Why throw your pledge under the bus for mere crumbs? It is clear that Obama will pocket the preemptive surrender on taxes, while pushing for more revenue and jettisoning the spending cuts.
At this point, House Republicans should pass another clean extension of all the Bush tax cuts with two additions. They should permanently repeal the Death Tax and they should extend the payroll tax cut. Let’s face it, Social Security is already bankrupt and the connection between the payroll tax and the program has long been severed. Why not obviate Obama’s class warfare by passing a tax cut that will benefit the very people he is targeting in addition to everyone else?
This is more about smart negotiating than it is about ideology. It’s about the Stupid Part living up to its reputation.