If you listened to many of the fiscal agreement's critics yesterday, especially on the right, one of the more common complaints was that the McConnell/Biden deal missed the entire point of the exercise. The entire effort was supposed to be about debt reduction, and the deal, they argued, makes matters worse, not better.
The Senate deal to avoid the "fiscal cliff" will add roughly $4 trillion to the deficit when compared to current law, according to new numbers from the Congressional Budget Office (CBO).
The CBO determined Tuesday that the package, hammered out late Monday evening by Vice President Biden and Senate Minority Leader Mitch McConnell (R-Ky.) would -- over the next decade -- come with a $3.9 trillion price tag.
To be sure, I can appreciate why this looks discouraging for the "Fix the Debt" crowd, but the truth is a little more complicated than the raw CBO score suggests.
First, the Congressional Budget Office was working from the baseline that assumed literally all of the Bush-era tax breaks would expire -- in other words, that Congress simply ignored all of the 2012 fiscal deadlines -- and by that metric, the agreement has a multi-trillion price tag. On the other hand, if we compare the new law against the baseline that existed as recently as Monday, the deal won't increase the deficit at all. On the contrary, it will bring in between $600 billion and $650 billion, depending on the extent to which you want to count interest on the debt.
The deficit has already shrunk by about $300 billion over the course of President Obama's first term, and thanks to this new revenue, it's on track to shrink even more.
Second, and this is the politically salient part, it doesn't make sense for conservatives to complain about this since they were the ones who demanded less deficit reduction, not more.
Indeed, let's remember why the CBO came up with a $3.9 trillion price tag: the fiscal deal is loaded with all kinds of tax cuts. The cost would have been far less if Democrats had their way on marginal top rates and the estate tax, but as part of the negotiations with Republicans, Dems accepted concessions that meant less revenue and less deficit reduction.
If conservatives find that disappointing, they have no one but themselves to blame.
And finally, let's also not forget that deficit reduction probably shouldn't be policymakers' top goal right now anyway, making the price tag largely irrelevant. As Matt Yglesias explained this morning, "[R]elative to the goals that are important -- minimizing economic damage in 2013, minimizing cuts in useful spending -- the deal that ultimately got made was a pretty good one."
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Some of the conservative critics wanted ALL the tax cuts extended. That is rank hypocrisy. The deficit and debt are merely a campaign theme for conservatives. If they really cared about the deficit and debt, they would have fought against extending ANY of the tax cuts.
Brace yourselves. Some of our Fox News informed trolls are going to be very upset.
it's too bad these people don't start experiencing "unfortunate accidents." Particularly south of the southern border of Pennsylvania.
I would add to my post that the hypocrisy is even worse when you consider that these same conservatives are the people who voted for Bush and the Republicans and did not seem to mind the fact that the debt and deficit exploded under the Republican administration and control of Congress.
@Mike. Just proves that they don't really care about debt or deficit reduction. If the ultimate goal is to reverse the New Deal (and yes, nevermind anything else you hear, that is sole GOP goal), then drowning the govt in red ink would be the best way to do it. I mean, nobody REALLY wants to pay more taxes. So if you run succesfully on a no new taxes platform, then you effectively shut off the revenue side of the ledger. By bloating the expense side, you force a sell off of govt programs. Once you pick apart their voting record and legislative attempts (like swapping defense cuts with discretionary expense cuts), it becomes crystal clear.
Personally, I think the bad part of this agreement is making the Bush cuts permanent under $400/$450. Unless there's more to it, I think that's insane. We need more flexibility to get revenue in the future, when employment comes back and the economy moves again and despite it all, it all can't come from the top. The rich could never pay enough. (Whoa, I sound like a troll!!! LOL!!)
There is nothing permanent in government except for GOP stupidity. That is why I laugh at people who think things are going to be forever, everything can be changed with a vote. It just depends on who is in control of the houses at that moment in time.
The revenue battles are going to move to the tax code. What constitutes simplifying the tax code is going to be the big issue. The special interests and rich are going to be fighting to preserve their current subsidies and preferential tax treatment. And those special interests have a lot of money and lobbyists to swarm Congress. The rest of us have a handful of Dems who are truly fighting for the people.
Pay no attention to the din caused by rabid ideologues who are the problem, and not the solution to improving the lives of middle class Americans!
A deal hammered out in the eleventh hour is not what I would prefer as SOP, but as dysfunctional as the Republican brand is, I will take what I can from the bedlam caused by ne'erdowell Tea Partyers destined to destroy everything Roosevelt, dealt! -Kevo
The question will now become (and you are seeing the spin already) what will the rank and file conservative think...
By spinning this as a "Debt/Deficit" problem they lob it back toward the democrats and try and make it about entitlements rather that Taxes
The thing with republican policy is that stripped down to it's most fundamental element is the ideas that the sole and only role of Government is Defense (and even that can be outsourced...)
And so long as Dems let the right shape the argument around the debt rather than taxes, the Dems will lose.
The question is whether the Dems have lost leverage or not, and whether there are adequate alternate sources of tax revenue after these giveaways that are politically achievable. Dems can fairly complain that income inequality is growing and that too much was given away in revenues from upper incomes.
The White House's larger "bargains" were looking at 1.4 Trillion and higher in new revenues and this deal delivers only 600 billion. Legislation will need to make up that shortfall from some new taxes, and it is far easier to lower taxes than raise them. Dems just agreed to lower a LOT of taxes on personal income, and the money will have to come from somewhere. So Congress will have to go to other wells.
Consider for a moment the possibility that this was no accident on the part of the Dem leadership. (For cynics, I grant that may be optimistic, but let's just assume there are good reasons for this move on taxes.)
What's nice is that in future deals, the GOP will be painted into the corner into either raising taxes on the rich, or taxing Oil Exports, or taxing the rapid programmed trade Financial Transactions that are blamed for destabilizing the markets. There are a few other tax policies whose revenue collection properties are only secondary.
Tax policy can be used to as a tool of setting national industrial goals- like towards green energy. North America is about to explode with fossil fuel production. Politically, we may not be able to do much about raising prices at the pump, but we can do something about shipping "our" oil overseas.
If we tax the heck out of shipping dirty oil overseas, using an EPA regulations governing pollutants to avoid global trade sanctions, then we will have an enormous source of tax revenue to paying down the debt and new spending on clean energy technologies.
The Dems have the sequester as leverage in the debt ceiling fight and the cuts are equal between the domestic and defense spending. Those spending cuts are going to hurt Republicans more than Dems because these cuts do not touch the "sacred cows" Medicare and Social Security benefits. The private defense industries are going to be very busy lobbying Republicans and Dems.
I don't see Dems or Republicans voting to increase oil taxes, but it is more likely that subsidies for industries are going to be terminated along with some other tax credits and deductions. The question is which ones will be ended or curtailed. That is where it is likely that the middle class will see their taxes go up, but over a gradual period of years. Changing the tax code to increase revenues would be easier for Congress. Unfortunately, the middle class does not have lobbyists like the special interests that will want to preserve their tax subsidies. Any suggestions to amend the tax code will bring out every lobbyist to preserve or create more tax subsidies.
Oil subsidies are only 4 Billion. There is a long way to go to get back to 1.4 trillion. You are correct that tax payers don't have the kind of lobbyists that the Oil companies do, but on the other hand, the Oil companies backed the wrong party, so there won't be too many sympathetic Dem ears. That will leave the GOP- fresh off of going to bat for the 1%- to do what?
Go to bat for Big Oil? Really?
This is going to be lovely. Obama has lots of leverage protecting defense/ medicare/ social security spending, so the GOP will feel the squeeze. The FTT would bring in $352 billion over 8 years (source), so that is one candidate, but it doesn't get you all the way there.
Oil export tax revenues will be huge. And we don't want the Natural Gas to be exported on LNG tankers- we want it to be converted to hydrogen so carbon capture can be done efficiently at "refinement" stage. Burning hydrogen releases zero Carbon.
Zero. That is why we need high taxes on LNG exports before the trade starts up. It is an easier lift because there are few entrenched interests.
What I am most curious about is your reasoning behind this statement:
Why would Dems not raise taxes on oil exports? Not only do I see Dem support, I see GOP moderates advocating it- folks like Bloomberg on climate change grounds, and even some GOP extremists advocating it- energy nationalists like Michael Savage advocating it on energy independence/ national security grounds.
There are enough corporatist Dems in Congress that are going to be facing elections. Lobbyists will be working those Dems, especially the Senators up for reelection. There are not enough Dems to push for an end to corporate subsidies because even many Dems are beholden to business interests. It is really a question of which businesses are going to win with the tax code changes.
I heard Scarborough this morning ranting that the deal both raised taxes and raised the deficit. This is hilarious. Pick one, either you wanted all the Bush era cuts to expire, which would indeed reduce the debt, or you want some or all of them to remain, but you don't get to have it both ways. Unless of course you're Morning Joe. Inconsistency and hypocrisy never seem to be an obstacle to these guys.
oops
What do you expect from people who live in an alternative universe where up is down, black is white, day is night, and 2+2=22?
Actually, the first point should have been that the fiscal cliff was NEVER about reducing the deficit more. In fact, it was about exactly the opposite. The fiscal cliff was about reducing the deficit TOO MUCH. Right now, we should be running a deficit.
Kabuki theater tickets! Now 1/2 off/50% more!
There you go again, thinking that the federal budget deficit, i.e. the imbalance between federal revenue and federal spending, is the same thing as The Deficit, i.e. the great moral problem having nothing to do with the ratio of income to outgo in the federal budget. The Deficit, you see, is a terrible, generation destroying monster conjured into existence by our creation of a Culture of Dependence among the
parasitic underclasspoor and middle classes.Instead of thifty hard-working laboring class, we have a bunch of moochers who think they're entitled to food and health care and refuse to work in labor camps the way the Chinese do. It is only through the moral improvement of the poor and middle class that The Deficit can be defeated and it is only by the deliberate infliction of suffering and hardship upon them that this moral improvement can be made to happen.
More revenue from rich people? What in the world do you think that has with combatting The Deficit?
If that isn't sarcasm then you have some serious lack of understanding what a deficit is and what creates a deficit, here is a clue, for all of his lying and whining about welfare Ronnie the buck stops here its his fault Reagan never tried to end welfare or reform welfare because unlike you Reagan knew tax dollars spent on welfare were recycled back into the economy. The biggest moochers as you call them are the wealthy, they produce nothing, they spend nothing and they always have a handout for more. Your problem is you were fed a story by Fox news and you fell for it hook line and sinker. Here is the first clue on where the deficit came from, starting to wars and a government handout to the drug companies called prescription plan D, then cut taxes twice.
Ahhhh Stevie, why in the HELL stop there?
Why don't we just reinstitute slavery, but this time just for poor people. And yea, we will just starve out those who won't be slaves!! Nothing makes you feel so important as seeing children with big bellies from protein depravation - I'm betting you REALLY GOT OFF on seeing all those starving children in Ethiopia and Somalia! And MAN, what a THRILL I bet you'd get of seeing people dead in the streets from starvation and disease!! Nothing can make you feel like a MAN more than that, I'll bet!!!
If you get one little drop more of empathy, you might just rise to the ranks of a monster!!
You know, I am really wondering if all the pollution in the air has caused the death of souls in weak people. What has happened in this country that people like you ENJOY MORE seeing people suffer than seeing all people succeed?
I'm sure Steve is being sarcastic. What's sad is that if you go to the right wing sites, they will have non-sarcastic posts that are nearly identical, and Steve's first part about "The Deficit" as a huge moral problem, is not directed only at the right wing sites, but at the "deficit scolds" like David Brooks, Thomas Friedman, Howard Schultz et al. who have trumped up the Deficit as an excuse to kill the New Deal.
Steve,
I think I owe you an apology. I should have looked you up first!! Sometimes snarks and sarcasm just flies over my head!!
Thanks Peter!!
Sarcasm and snark don't read well. FFS we have a welfare queen posting this kind of crap day in day out every since he re regged, only he believes it.
This is not sarcasm: I just caught Bryan Fischer of the American Family Association giving his opinion on the idea that it would be a good thing to raise taxes on high-income taxpayers. As far as he is concerned, the idea is a "Satanic" violation of the Tenth Commandment ("you shall not covet")--and, since Jesus affirmed that he was fulfilling the Old Testament Law, therefore liberals are against Jesus. An interesting theocratic wrinkle on the old "you just hate productive people" meme.
Maybe, just maybe, Fischer should read Matthew, Mark, Luke, and John more. Seems he is just bound up in the OLD Testament - you know, all that BS that Jesus came to get rid of?
What a bunch of hogwash this is! The deficit has already shrunk by $300 Billion? Really? So it's just a tad over $1 TRILLION now? Wow, I'm impressed!!!
What kind of idiots do you think the American people are? STOP the maddening SPENDING! STOP the maddening SPENDING! Your children are rightly ashamed of Obama and ALL Democrats that follow your line of reasoning. Today's children are looking at an outright nightmare/mountain of debt, and DEMS, unable to move their snouts away from the pork trough, will be accountable by history.