Ezra Klein makes a truly interesting point this morning with regards to the failure of the Deficit Commission “Super Committee”. Their failure to come to an agreement and the trigger pulled by that outcome is a dream situation for progressives.
Imagine if the Democrats offered Republicans a deficit deal that had more than $3 in tax increases for every $1 in spending cuts, assigned most of those spending cuts to the Pentagon, and didn’t take a dime from Social Security, Medicaid or Medicare beneficiaries. Republicans would laugh at them. But without quite realizing it, that’s the deal Republicans have now offered to the Democrats.
In August, Republicans scored what they thought was a big win by persuading Democrats to accept a trigger that consisted only of spending cuts. The price they paid was 1) concentrating the cuts on the Pentagon while exempting Social Security, Medicaid, Medicare beneficiaries, and 2) delaying the cuts until January 1, 2013. That was, they figured, a win, as it eschewed taxes. Grover Norquist‘s pledge remained unbroken.
But 12 years earlier, George W. Bush had set a trigger of his own. In order to pass his tax cuts using the 51-vote budget reconciliation process, he had agreed to let them sunset in 2010. A last-minute deal extended them until the end of 2012.
So now there are two triggers. One is an extremely progressive spending trigger worth $1.2 trillion that goes off on January 1, 2013. The other is an extremely progressive tax trigger worth $3.8 trillion that goes off on…January 1, 2013. If you count reduced interest payments, the two policies alone would reduce future deficits by about $6 trillion. That’s far more than anything the supercommittee came close to discussing. It’s distributed far more progressively than anything the Democrats have even considered proposing. And all that needs to happen for it to pass is, well, nothing.
Republicans can’t stop these triggers on their own. They need Senate Democrats and President Obama to join them in passing an alternative, or they need House and Senate Democrats to join them in overturning President Obama’s veto of their alternative. So the only way for Republicans to avoid this dual-trigger nightmare is to somehow convince Democrats to bail them out.
The Republicans are not without options, of course, and Klein goes on to discuss those at length. But this is the first analysis of the situation that we currently find ourselves in that shows how shrewd this agreement made by Democrats was.
Republicans may believe they can cut their way to a balanced budget but they are wrong and, in their heart of hearts, they KNOW they are wrong. Unless they destroy all of the social safety nets and social contracts that make America a place to envy and a place that values its citizens, they MUST raise taxes. Not historically-high levels, either. In fact, the repeal of the Bush tax cuts is simply resetting them back to where they were just after the turn of the century and they were lower then than they were, say, during Ronald Reagan‘s presidency.
Meanwhile, with their failure to pass President Obama’s American Jobs Act, Republicans have chosen to allow middle-class taxes go up by as much as $1,000 per year. You can calculate how much your taxes will rise by using a handy dandy calculator HERE. I did it and my taxes will go up over $2,000 next year if this tax cut expires.
But the super wealthy that get to take advantage of the Bush tax cuts? They are going to do juu-uust fine.