James Pethokoukis

Politics and policy from inside Washington

No big budget deal? Blame Obama, not Boehner

July 10, 2011

President Barack Obama could have done two things that might have saved his Mother of All Budget Deals.

First, he could have embraced market-centered, consumer -focused reforms to Medicare. That was about as likely as him accepting an Obamacare rollback.  Second, he could have agreed — as House Speaker John Boehner and Republicans suggested —  to sharply reduce tax rates in return for fewer special tax deductions/breaks/loopholes/subsidies. Recall that is what his own debt commission recommended.

Instead, he apparently offered to keep top individual rates where they are, at 35 percent, in exchange for tax reform. Now that’s a big tax hike. But it’s also revealing. As a GOP source on the Hill put it:

Their fierce insistence on higher taxes is beyond bizarre.  …  The bipartisan consensus on tax reform (broader base & lower rates) was championed by President’s fiscal commission, and yet now is being rebuked by the President. Lowering top rates that would help make America more competitive was too large a leap for a true class warrior.

Obama agrees with the left-of-center consensus that America is dramatically undertaxed. Those tax rates from his fiscal commission would have resulted in revenue higher than the historical 18-19 percent of GDP, as seen in this chart:

But 21 percent of GDP — the highest in U.S. history — isn’t nearly enough for the Obamacrats. Even if Obamacare is successful in bringing down health costs, top liberal policy wonks think far more revenue will be needed to deal with an aging America. First, this budget from the Economic Policy Institute. It sees revenue at 24.1 percent of GDP, which still leaves a huge budget gap:

Then there is this plan from the George Soros-backed Center for American Progress, which operates as the White House’s outside think tank. It sees revenue at 23.8 percent of GDP, even adding a carbon tax and transaction tax into the mix.

 

In short, Obama sees a need for a permanently bigger government and a lot more tax revenue to fund it.  Had Obama agreed with his own debt commission and Republicans, a big agreement was possible. Or he could have proposed real reforms to entitlements. But he declined and there wasn’t a mega-deal. Don’t blame Boehner for that.

Comments

Good article, but don’t expect democrats to be swayed by facts. 15% flat tax, no graduations, no loopholes, no exceptions. When some pol thinks he has a great idea (to get himself re elected), that pol will have to face all of us if it raises our taxes.

Posted by zotdoc | Report as abusive
 

Alex, policy that favors labor instead of policy that favors capital (like we had for 50 years prior to the supply side scam) would gradually reduce the percentage of the population liveing under the poverty line. Just like the supply side scam gradually reduced our collective lifestyle.

The “free market” (for capital to exploit labor on both ends of trade) is what got us here, how will it change it’s results and benifit the vast majority it now harms?

We already know what capital believes labor is worth, by their outsourceing our industry to slave wage countries as fast as possible. They just have a hard time selling that production there, because few make enough to buy what thay produce. So they export to countries where workers are paid enough to afford more than essentials. The three decade plus decline in purchasing power of the workers here has finally reached the point that we cannot buy at our previous rate. Meaning there is insufficent demand to warrent any raise in production, and therefor no new hireing.

I believe until policy reverts to what was in effect when the U.S. created the highest standard of liveing in world history, (1970, or so) our national decline will continue. I have yet to see any logical, reality bassed argument, against this belief.

We can continue down this path to third world hell for the 85% who are workers, or tied to workers, and undeserved, expolited, enormous wealth for the few top percent, like every other two tiered country. Or we can attempt to make our government work for everyone like it did in the past.

Basicly it is a question of who do you believe government is instituted for, the common people of the rich and influencial?

Posted by reggiewhitefish | Report as abusive
 

b.s.!

Posted by shall1935 | Report as abusive
 

No tax increases. No “Mini-Deal.” JUST CUT SPENDING! Hear the American People when we say this: They told us Chevy trucks were unsafe, only to find out they had rigged the gas tanks with sky rockets; they told us Food Lion meat was tainted only to find out they had planted bad meat to help a union campaign against the food chain; they told us George W. Bush had tried to avoid active duty in the military only to find that the “documents” “proving” this were fake; they told us that if we spent 1 TRILLION dollars in so called “stimulus” money that our roads and bridges would get fixed and unemployment would go no higher than 8%; they told us that we had to spend billions of dollars on TARP or the entire banking system would collapse and yet the “derivative” system that supposedly caused it is still in place; Far left enviro-doomsayers like Paul Ehrlich said, based on junk/pseudo science, that the world would end. He said it would happen by the year 2000, due to a population boom, and that by 1980, “all important animal life in the sea will be extinct”*; we were told that alar, sprayed on apples, would cause cancer but were not told that test results were based on drinking 5000 GALLONS of apple juice per day; they have told us spending more money for education (and more government/union control) will make our kids smarter but test scores have declined for decades; they tell us there is no possible way government spending can be cut but spend billions of dollars studying shrimp on tread mills;** Now Obama’s tax cheat, Secretary of the Treasury Geithner, is telling us that if the debt ceiling is not raised so the federal government can borrow trillions more dollars the world is going to end….
AND WE’RE SUPPOSED TO BELIEVE THIS BULLSPIT NOW? HOW FRAKKING STUPID THEY THINK WE ARE?!!
*New York Post: Profits of Doom
**http://www.washingtontimes.com/news/20 11/may/26/tax-dollars-shrimp-treadmills- jell-o-wrestling/?sms_ss=email&at_xt=4de 5757256baaf5f%2C0

Posted by pebbles14 | Report as abusive
 

There are problems galore in the current debt discussions. Obama is, and has been stuck in campaign mode since he was elected. He ignored and continues to ignore the advice of his own economic advisers, and insists on raising taxes. Corporate taxes are too high. Markets are uncertain, and businesses are not going to do much capital investment, hiring or much of anything else. Republicans and Tea Partiers, help pass a balanced budget amendment, with NO smoke and mirrors allowed. Abolish the U.S. Department of Education, cut the Homeland Security budget and staff in half, close down the IRS and with it, the millions of hours of compliance and billions of dollars shuffled around to accommodate a tax code UNintelligible to mortals. Cut the number of government workers over time and dump programs that are ineffective and simply don’t work. Government should not be in the job growth arena, it should live within its means, exactly as most Americans are struggling to do. Stop overregulation and assuming governmental functions that have nothing to do with what our founders intended. While you’re at it, cut out the garbage about interstate commerce affecting everything government from the ocean tides to the rising and falling of the moon. Let parents decide where to send their children to school, not government. Let taxpayers, the few of us left, decide how to redistribute our wealth, we are FAR better at it than our current leaders and Congress. Stop creating dependency of Americans on government for everything, from cradle to grave. While government is at it, how about returning some semblance of responsibility to states for their own citizens? It is clear to me as a red-blooded American that government has become more of the problem, and far less of the solution to much of anything. You may assume that this voter is mad as hell, and not going to take it any more. (with apologies to Network). NOT all wisdom resides in Washington, far from it.

Posted by curtis41 | Report as abusive
 

The deficit is due to Bush’s tax breaks for millionaires and Bush and Obama’s useless wars. There was no deficit when Bush entered office. This is so simple even republicans can figure it out if they’d stop watching Beck and the drug addict. Social security does not contribute to the deficit–why cut it to save some billionaires yacht subsidy? As for medicare, well, do republicans really want to be known as the party that threw seniors under the bus, considering that seniors usually vote republican? Eliminate the tax breaks for the uber rich, stop offshore tax havens, end subsidies for big oil, allow medicare to bargain with big pharma, and have the wealthy just pay their fair share–that’s all anyone is asking.

Posted by cautious123 | Report as abusive
 

That would of been well and good if Obama was a Republican President – but he is not.

Posted by uc8tcme | Report as abusive
 

Without a likely deal it would be prudent for the Feds to have a real non-political contingency plan to prioritize spending cuts when the debt ceiling is reached (or before if possible). What’s the plan?

Posted by mikecardinal | Report as abusive
 

Gee, Cautious 123, where to start…

The deficit is due to Bush’s tax breaks for millionaires [but not profligate spending by a Congress controlled by Democrats since 2007 ] and Bush and Obama’s useless wars. There was no deficit when Bush entered office [debateable depending on how much trust you put in CBO budget projection methedology]. This is so simple even republicans can figure it out if they’d stop watching Beck [he no longer on Fox] and the drug addict [hard to watch someone on the radio, besides, I think he's in recovery - but since name-calling helps you hide from the facts, go right ahead]. Social security does not contribute to the deficit [since primarily Democrat Congresses raided the SS trust fund wait until the payout really exceeds SS taxes and then get back to me on this one] – why cut it to save some billionaires yacht subsidy [you mean John Kerry here I assume]? As for medicare, well, do republicans really want to be known as the party that threw seniors under the bus [yet Obamacare proposes billions of dollars of cuts in Medicare - who's throwing granny under the bus], considering that seniors usually vote republican [Facts? Oh, I forgot. You don't need 'em]? Eliminate the tax breaks for the uber rich [Yeah! Take 100-percent of all their income over $75K - see where that gets you], stop offshore tax havens, end subsidies for big oil, allow medicare to bargain with big pharma, and have the wealthy [Please will one of you liberals give me a hard definition of "wealthy" - just so I know] just pay their fair share [also please give me a definition of "fair share." Is it right for 47% of American households to pay no income tax. Shouldn't everybody have to pay something to make it really fair - oops, there I go again using reason] – that’s all anyone is asking.

Posted by ConservaTarian | Report as abusive
 

Cautious 123 offers a very good start — the rest is indeed “emotional hype” by the wealthy who simply don’t want to pay their fair share of taxes. The Bush tax cuts created this mess — simply reverse them immediately and we might have something to talk about, otherwise dump the talks, since they are producing nothing of value. Right now Obama is playing a sucker’s game with the Republicans who hope he will give in at the last minute, which he has a habit of doing. That is really what worries me — I simply don’t trust him not to screw everyone except to rich “to save the country.” If he does that, there won’t be a country left worth saving. Anyone remember the 14th Amendment and what it is for? Somebody remind Obama time has run out and he need to tell the Republicans he will use his powers as president to keep the country going until they come to their senses. THAT attitude is what we need out of our President RIGHT NOW.

Posted by Gordon2352 | Report as abusive
 

Ditch Obamacare, leave the Middle East to burn on its own and that will balance the budget without new taxes. Even the Chinese say so. Oh yeah, cut down on the extravagant campaign trips on the taxpayer dime and we may even have a surplus? Peas anyone? Myself, I prefer Tea!

Posted by iowafarm | Report as abusive
 

Basically the message in this opinion is to blame the president for not being a republican?

Posted by 8E35n7UvzaHcHgd | Report as abusive
 

It’s no wonder why the country is in trouble… Just read the comments. Unfortunately they reflect (nearly perfectly) the talking points of the pols…. We need real answers, and real soon… Otherwise it’s third-world status for your children and grandchildren.
Of course will all the cuts to education, it’s easy to see why no one knows how to think anymore…
Get schooled, it’s educational.

Posted by edgyinchina | Report as abusive
 

It is depressing that so few liberals seem to have any real facts as a foundation for their arguments. Case in point: Bush tax cuts are responsible for the current deficit. The fact is the non-partisan Congressional Budget office pegs the contribution of the Bush tax cuts to 9%, Let me repeat that, nine 9 percent. The rest of the trillions is due to irresponsible spending by the Democratic congress.

Posted by omoore | Report as abusive
 

Democrats frequently state everyone “should pay their fair share” of taxes. I agree. Let’s make sure everyone, including the 50% that now pay NO taxes, all contribute something to the national coffers. That’s fairness.

Posted by LDRider | Report as abusive
 

All of this would not pass the Republican House because it includes raising revenue. Why have the republicans not taken up the mantle of the commission’s recommendations and skewered the Democrats with it? Because it includes raising revenue and they worship at the mantle of Grover Norquist. No revenue unless it is offset by cuts. So no, the simpson-bowles plan was not an option for Republicans and it is disingenuous for Mr. Pethokoukis to say so.
Now, make no mistake, Obama is to blame. His refusal to face down the republicans with a plan of his own, along with the senate democrats, has just made the republicans dig themselves deeper into a partisan hole with this recalcitrant “no revenue under any circumstance” mantra. Now they can’t compromise even a little, and they have members (even a national candidate) saying “it doesn’t matter if we default”. Call me silly, but I think the public will remember that assuming something bad happens. Obama meekly sat by watching them move further and further towards this untenable position. Now suddenly, he has seen the light! Perhaps its good politics, but its rotten governance.

Posted by robscheerger | Report as abusive
 

All of this would not pass the Republican House because it includes raising revenue. Why have the republicans not taken up the mantle of the commission’s recommendations and skewered the Democrats with it? Because it includes raising revenue and they worship at the mantle of Grover Norquist. No revenue unless it is offset by cuts. So no, the simpson-bowles plan was not an option for Republicans and it is disingenuous for Mr. Pethokoukis to say so.

Now, make no mistake, Obama is to blame. His refusal to face down the republicans with a plan of his own, along with the senate democrats, has just made the republicans dig themselves deeper into a partisan hole with this recalcitrant “no revenue under any circumstance” mantra. Now they can’t compromise even a little, and they have members (even a national candidate) saying “it doesn’t matter if we default”. Call me silly, but I think the public will remember that assuming something bad happens. Obama meekly sat by watching them move further and further towards this untenable position. Now suddenly, he has seen the light! Perhaps its good politics, but its rotten governance.

Posted by robscheerger | Report as abusive
 

Not raising the debt ceiling is a de facto balanced budget amendment. So, why all the talk of enacting a BBA down the road? The democrats argue that if we do not continue to spend beyond our means we will have a financial meltdown. Funny enough, I manage my personal finances using this logic: I invest and save for my future by maxing out on as many 29% interest rate credit cards those gullible credit card companies send me. But seriously, either the spineless Republicans will finally stand firm, or we’ll soon need wheel barrows to carry around the cash we’ll need to buy bread. The real problem facing this nation has nothing to do with finances– it is that America has turned its back on God.

Posted by tomsmith | Report as abusive
 

Not raising the debt ceiling is a de facto balanced budget amendment. So, why all the talk of enacting a BBA down the road? The democrats argue that if we do not continue to spend beyond our means we will have a financial meltdown. Funny enough, I manage my personal finances using this logic: I invest and save for my future by maxing out on as many 29% interest rate credit cards those gullible credit card companies send me. But seriously, either the spineless Republicans will finally stand firm, or we’ll soon need wheel barrows to carry around the cash we’ll need to buy bread. The real problem facing this nation has nothing to do with finances– it is that America has turned its back on God.

Posted by tomsmith | Report as abusive
 

Statistics in an opinion column? Don’t be fooled Reuters-readers. There’s about as much truth in this article as their is in an episode of the Daily Show. Don’t forget what portion of the site Mr. Pethokoukis is relegated to. This is not news. It’s one man’s spin and rantings. He’s completely anti-Obama, has as little regard for facts as Fox News, and is clearly set on continuing the American delusion that Obama is evil. I’m not buying it, and I hope you don’t either.

Posted by TrueIronPatriot | Report as abusive
 

Extremists have taken over the Democratic Party; they are the – unfriendly to capitalism -establishment. This faction seizes upon crisis to exploit the short memory of the electorate.

But their ideology has no respect for private property and spends the future earnings of children and posterity who have no say; it is taxation without representation.

Progressive schemes lead to big taxes, spending, big government, and bellicose regulation. It is printing funny money, borrowing from hostile nations, bailing out unions and too big to fail crony capitalists that play the capricious DC game.

And with it comes the destruction of incentives and concomitant malaise, uncertainty and lethargy in business activity. People are afraid to spend, to buy homes, they languish in pessimism and fear. Entrepreneurs have no idea of the cost of hiring, regulations and liabilities.

These politicians do not want to argue the merits of Big Mother, rather they assassinate the character of those who differ; label all dissenters as “extremists” “racist” or fill in the ad hominem.

“You can fool all of the people some of the time, and some of the people all the time, but you can’t fool all of the people all of the time.” (Lincoln)

Posted by cornelius | Report as abusive
 

It comes as no surprise this liar would blame someone other than himself.

He’s the one that has the country in the grip of default, if you believe what he says.

If the man could speak one sentence without lying it would be a miracle.

I hope and pray that Boehner doesn’t back down and the Republicans stick to their guns.

The American people are taxed enough already. Families are losing everything they have and you see this grinning jackass on television acting like he’s our savior. He’s the cause not the cure. He’s the cancer that’s spreading fast.

Obama has fooled the people but now the truth is coming out and he won’t being fooling us anymore. There are the diehards that will back him no matter what. They’ve attached their star to his coattail but for the rank and file American I truly believe they see this man for what he really is and I sure hope we can vote him out of office or maybe incite the GOP to start impeachment charges against him.

Anything would be better than what he’s doing to our country.

Posted by disguested | Report as abusive
 

I would vote YES to a graduated FLAT TAX.. no additional forms, no deductions, no exemptions, no loopholes. Then compare who paid what under the NEW structure to the prior year. We all pay based on Gross Income. KISS

Posted by joanrhodeisland | Report as abusive
 

atoksoft

Posted by atoksoft | Report as abusive
 

Reuters, this guy is terribly biassad. I thought you guys were above spreading drivel like this.

Posted by surfinStevePi | Report as abusive
 

James Pethokoukis:
(brought to you by Rupert Murdoch)

Posted by horrias_circle | Report as abusive
 

Blame the party of NO

Posted by kc10man | Report as abusive
 

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