Economy

Are Romney And Obama Competing For The Austerity Prize?

Brian Beutler | May 25, 2012, 6:41AM

President Barack Obama and Mitt Romney

The American economy will sink back into recession if Congress fails to unwind a messy coil of austere fiscal policies that will trigger automatically at the beginning of the year.

Across the spectrum, experts are imploring political leaders not to be myopic and unyielding: delay the budget cuts until the economic recovery really takes hold, but be ready with a more considered course of deficit reduction when that moment arrives.

Yet Barack Obama and Mitt Romney, and their surrogates on Capitol Hill, are locked in a fight over which candidate and which party will more quickly and effectively reduce the deficit -- the opposite of what economists say we need.

The Obama administration and campaign trumpet data and articles showing that Obama's supposed spending binge is a right-wing fabrication. Paul Ryan -- the GOP's official spokesman on fiscal issues -- boasted that a Republican victory in November will give his party a mandate to turn his controversial spending-slashing budget into law.

"If we make the case effectively and win this November, then we will have the moral authority to enact the kind of fundamental reforms America has not seen since Ronald Reagan's first year," Ryan said.

At the same time, the parties are at pains to paint their rivals as the true merchants of austerity.

"Ryan also argued with a straight face on [Meet The Press] that the Ryan-Romney plan would avert the very European-style austerity on which it's modeled!" Obama strategist David Axelrod tweeted recently.

Resolving the tension between these two seemingly incompatible arguments -- more fiscally responsible, less austere -- turns out to be more difficult than adding up numbers on a ledger. But it provides an instructive look at what the candidates and parties stand for this election cycle.

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John Boehner

Why Republicans Are Flirting With Debt Limit Debacle 2.0

Brian Beutler | May 16, 2012, 4:53AM

House Speaker John Boehner with House Majority Leader Eric Cantor in the foreground.

Whether or not he can make it stick in any meaningful way, House Speaker John Boehner (R-OH) revealed on Tuesday that Republicans still have an appetite for debt limit brinksmanship -- even after the last round nearly crippled the economy, and left the GOP's congressional approval ratings in the sewer.

When Republicans went home for recess last August, after placing the country's AAA credit rating at risk, and narrowly avoiding a self-imposed default on the national debt, they caught such an earful from constituents that they spent several weeks toning down their rhetoric and avoiding big public spats with Democrats.

So what gives? Why would Republicans signal to voters that they want to put the country through the same fiasco again -- particularly when the outcome of the presidential election remains in doubt and Boehner's House Republicans are already expected to lose several seats?

There are several plausible, in some ways self-reinforcing, explanations. And they all reflect the degree to which the Republican Party has been radicalized and behaves as if it's in the midst of an insurgency. But they don't change the fact that selling the public -- and more to the point, voters in swing districts -- on the idea of a Christmas-time debt limit fight is going to be deadly politics.

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Deficit

Who Really Caused The Deficit? (CHART)

Sahil Kapur | May 15, 2012, 5:17AM

President Barack Obama and Mitt Romney

This week Republicans will attempt to move the national political conversation back to a familiar theme with a series of attacks on President Obama over the national debt. The GOP released a web video Monday bashing his "broken promises" on the deficit and previewed a major speech Tuesday by likely presidential nominee Mitt Romney on the issue.

Divorced from context, the numbers are uncomfortable for the President and are ready-made for pointed partisan attacks. Under Obama's watch the national debt has risen from roughly $10 trillion to $15 trillion, a record high. But to what extent are his decisions while in office to blame? The answer: very little. The vast bulk of the debt is the result of policies enacted during the Bush administration coupled with automatic increases in federal spending and decreases in tax revenue triggered by the economic downturn.

Those are economic facts of life known to experts but that often gets lost in the political debate (and which Obama's opponents are willing to obscure). So with the GOP's push to return the deficit to the center of the political conversation, here's quick reminder of the basic facts that you may have forgotten.

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Taxes

Top Dem Explains Plan To Break GOP Anti-Tax Absolutism

Brian Beutler | May 8, 2012, 10:37AM

Rep. Chris Van Hollen (D-MD)

Breaking Republicans' anti-tax absolutism is key to understanding just about everything Democrats have been doing for months now, both in Washington and on the campaign trail. It's the strategic underpinning of the Buffett Rule and the surtax on million-dollar earners; it's the purpose of the so-called "sequester" -- the deep cuts to defense and discretionary spending that will kick in next year if Congress doesn't pass a substantial deficit-reduction plan -- in the debt-limit deal, and it explains Democrats' reluctance to unwind the sequester until Republicans agree to significant new revenues.

So far it hasn't worked, and most elected officials don't expect any movement on the issue until after the election.

Even if President Obama wins re-election, though, what's to stop Republicans on Capitol Hill from linking arms and blocking any tax revenues?

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Chuck Schumer

Dems Squeeze GOP Over Taxing Wealthy To Pay For Affordable Student Loans

Brian Beutler | April 30, 2012, 5:56AM

Sen. Chuck Schumer (D-NY)

Now that the GOP has dropped its politically untenable objection to extending low-interest student loans, the legislative battle has entered a familiar realm, just weeks ahead of a scheduled rate hike: How should Congress pay for keeping the loans cheap?

It's familiar terrain for observers of the payroll tax fight, which ended with both parties simply agreeing not to pay for the holiday at all. But before they reached that point, the parties bickered over various financing schemes, while pushing ideologically opposed offsets. Republicans wanted cuts to domestic support programs, Democrats wanted to raise income taxes on income over $1 million a year.

This time around, though, the Democrats' opening bid is different -- and they argue that it reflects their willingness to set politics aside and extend the loan rates, currently set to double at the end of June, without a fight, while Republicans try use the coming cliff to eat away at President Obama's health care law.

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Debt

Top Congress Scholar Says Country Could Easily Fall Off Fiscal Cliff In January

Brian Beutler | April 25, 2012, 5:57AM

Protestors demand "Cut Spending Now" near the Capitol building in Washington DC

A renowned congressional analyst thinks there's a good chance that the country could fall off a fiscal cliff on Jan. 1, no matter who wins this November.

At an American Enterprise Institute event on the future of Medicare Tuesday, AEI scholar Norm Ornstein outlined a scenario in which Congress falls on its face this winter, and fails to address the expiring Bush tax cuts and payroll tax holiday, automatic sequestration spending cuts, lapse of federal borrowing authority and other spending and tax provisions set to contract the budget automatically at the end of the year.

"Most of the cognoscenti in Washington say, Of course they'll reach an agreement because they can't not reach an agreement,'" Ornstein said. "Get inside the belly of the beast and you realize these days they can not reach an agreement."

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Buffett Rule

How Washington Forgot Where The 'Buffett Rule' Came From

Brian Beutler | April 13, 2012, 5:08AM

It's been nearly seven months since President Obama introduced the Buffett Rule. He first described it at the White House last September, shortly after the GOP's persistent refusal to take any new tax revenue from wealthy Americans sank his bid to pass major deficit-reduction legislation and nearly turned the standoff over raising the debt ceiling into a full-blown economic calamity.

At the time the "rule" was only a principle: People who make over $1 million a year should pay at least as high an effective tax rate as middle-class Americans. In context, it served a clear purpose: With the parties poised for a major, unavoidable conflict over the budget and national priorities, Republicans needed to be broken of their anti-tax orthodoxy. The Buffett Rule was a politically bulletproof cudgel, and popular with President Obama's base to boot. It wouldn't on its own solve the country's long-run budget problems, but that wasn't the point -- this was a small piece of a broader package of fiscal policies Obama had introduced. But it served a huge symbolic purpose. The real point was to pull back the veil on the GOP's true vision for the country, force them to deal sensibly on key national priorities. And if Democrats reaped a political bounty in the process, all the better.

Fast forward to this week. Americans are paying their taxes, Mitt Romney -- a poster child for tax inequity -- has all but cinched the GOP presidential nomination, Obama has renewed his push for the Buffett Rule and the Senate will hold a vote on a Buffett Rule bill next week. The synergy is clear, and intentional -- part of a careful political strategy. But the upshot thus far isn't that Republicans are retreating from their anti-tax absolutism (they're not) but that high-profile members of the commentariat have forgotten all of this history.

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Barack Obama

White House Ramps Up Push For 'Buffett Rule' With Romney Nomination Looming

Brian Beutler | April 10, 2012, 6:06AM

President Barack Obama during his 2012 "State of the Union" address

Ahead of a Senate vote next week to put members on record supporting or opposing the so-called "Buffett Rule," the White House is rolling out a public campaign to tout the notion that people who make more than $1 million a year should pay a bigger share of their income in taxes than middle-class Americans.

The subtext is heavily political. On Monday, the Obama campaign hosted a conference call to pressure likely GOP nominee Mitt Romney to release years of tax returns after Romney revealed that his own effective tax rate last year was below 15 percent. And on Tuesday, Obama himself will travel to Florida to publicly push the Buffett Rule.

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Barack Obama

Obama Attacks Romney, Republican Party In Fiery Budget Speech (VIDEO)

Brian Beutler | April 3, 2012, 2:02PM

President Barack Obama

In the fieriest speech of his presidency Tuesday, Barack Obama lit into the Republican Party's vision for the country's future as outlined in the House GOP budget, and endorsed by his most likely election rival Mitt Romney.

Obama decried key planks of the Republican agenda -- particularly calls for large tax cuts for wealthy Americans, and a plan to phase out traditional Medicare -- which he took care to describe accurately, though in hostile terms.

And in response to questions from the audience, Obama urged the press not to confuse rancor over the parties' competing visions for the country as typical partisan bitterness for which Democrats and Republicans are equally culpable.

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Budget

New Report Creates Confusion, Spin Over Obama Budget (CHART)

Brian Beutler | March 16, 2012, 5:34PM

A new Congressional Budget Office report has reignited the spin wars over President Obama's budget, and Republicans are eagerly blasting articles to reporters about how the administration would explode deficits and debt if left to its own devices.

But this line of attack is based on a questionable premise, familiar to veterans of the past year's budget wars.

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Barack Obama

How Congress Helps Republicans, But Not Democrats, Weather Bad Economies (Charts)

Brian Beutler | March 14, 2012, 5:43AM

If President Obama's economic recovery continues apace, and his re-election prospects grow along with it, it won't be because Congress went out of its way to help. As we noted Tuesday, Obama's economy has benefitted from less of Washington's largesse than did crypto-Keynesian Ronald Reagan's. But this is actually part of a broader pattern. Recently, Republican presidents have benefited from accommodating Congress during times of economic weakness, while Democratic Presidents Clinton and Obama watched Congress suddenly grow stingy under their watch.

That pattern has significant implications for how these presidents weathered economic downturns politically, and to a great extent explains the political troubles Obama's faced in his first term.

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Steny Hoyer

Hoyer Working Behind The Scenes On Major Deficit Reduction Bill

Brian Beutler | February 27, 2012, 12:53PM

Steny Hoyer speaks at press conference with House Ways and Means Committee Democrats. November 30, 2011.

House Minority Whip Steny Hoyer (D-MD) is looking to shake legislative politics out of unconsciousness as early as this spring, and force a vote on a bipartisan legislative proposal - which would include higher taxes and cuts to federal programs -- to reduce deficits by trillions of dollars over the coming years.

The push is intended to disrupt the consensus among most political leaders that Congress will punt budget consolidation efforts until after November -- when the election returns are in, and the January 1, 2013 expiry of the Bush tax cuts and deep across-the-board spending cuts make real action inevitable.

In a speech hosted Monday morning by Third Way, Hoyer revealed that he and other lawmakers are looking for the right moment to introduce a bill that would achieve the sorts of deficit reduction goals that have eluded Congress and the White House thus far.

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Mitt Romney

D'oh! Debt Hawks Fear Most GOP Tax Plans Will Increase Deficit

Brian Beutler | February 23, 2012, 1:48PM

A key test for the political establishment and the media this campaign cycle will be whether they accurately explain the Presidential candidates' budget plans to voters, or whether they allow the candidates to spin their way out of the severe implications of their own proposals. The election will hinge to a large extent on the two parties' visions for the role of the federal government and how to pay for it, and keeping the taxing and spending implication of those visions clear is the key to helping voters make informed decisions at the polls.

An event hosted Thursday morning by the fiscal discipline hawks at the Center for a Responsible Federal Budget offered this corner of the establishment an early critique of the GOP candidates' tax and spending plans -- all of which drew mixed reviews or worse.

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Mitt Romney

The GOP's Real Tax Cut Goal Has Nothing To Do With The Middle Class (CHART)

Brian Beutler | February 23, 2012, 5:50AM

Republican presidential candidate Mitt Romney speaks at the Livonia and Greater Farmington Hills Area Chambers of Commerce luncheon at the Farmington Hills Manor in Farmington Hills, Michigan, Thursday, February 16, 2012. (Patricia Beck/Detroit Free Press/MCT)

You'd think that with the economy growing, and indeed accelerating in its growth, the GOP would be setting itself up to claim all the credit come November -- rather than reluctantly embracing President Obama's call for a payroll tax cut, while talking down its efficacy as a tonic for the job market.

Instead they're obstinately digging in. And with all of the party's presidential hopefuls lukewarm on the payroll tax cut and leapfrogging each other with plans to cut taxes for wealthy Americans alone, Republicans are inadvertently clarifying for voters what they know to be unpopular economic policies.

"Let's be honest, this is an economic relief package, not a bill that's going to grow the economy and create jobs," said House Speaker John Boehner last week in a statement ahead of the passage of the payroll tax cut deal.

The package itself won a modest majority of Republican votes in the House and a significant minority of Republican votes in the Senate. But both stand in complete agreement with the GOP presidential field on the need to enact large, permanent tax cuts for the highest earners in the country. This is what Mitt Romney refers to as pro-growth tax policy. So to give you a clearer sense of what the GOP would have rather done than renew the payroll tax cut, here's a graphical breakdown.

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Taxes

What's Behind Obama's New Push For Corporate Tax Reform

Brian Beutler | February 22, 2012, 12:45PM

President Barack Obama during his 2012 "State of the Union" address

A new Obama administration framework for reforming the business income tax code is touching off a brand new election-year policy debate in Washington. But this time around there's a great deal of consensus between the parties over the ideal nature of reform. And that means there will be two main obstacles to success. The first issue will be political concerns -- should Republicans hand President Obama a substantive victory with control of the White House on the line? The second will be the parochial concerns of powerful interest who stand to lose tremendous subsidies as a result of the reforms.

In a briefing with reporters Wednesday, Treasury Secretary Timothy Geithner laid out the five principles underlying the proposed reforms. Any corporate tax reform should eliminate scores of loopholes and subsidies and use the savings to lower rates -- specifically from a current top rate of 35 percent down to 25 percent.

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Debt Ceiling

Uh-Oh... Looks Like We'll Hit The Debt Limit Again This Year

Brian Beutler | January 31, 2012, 1:09PM

President Barack Obama

President Obama sacrificed an awful lot last year to take the debt limit off the legislative table until his second term, or some lucky Republican's first term. More importantly, he wanted it off the table until after the 2012 elections, to prevent a replay of last year's debt limit fight from playing out in the middle of election season, when the political consequences would be farther-reaching. And by "farther-reaching" we mean the doomsday scenario of legislators succumbing to a collective action problem and allowing the country to default on its debt.

Well, it looks like Obama will probably get his wish, but it will be an awfully close call.

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Mitt Romney

CHART: How Romney's Tax Rate Stacks Up To Recent Presidential Candidates'

Brian Beutler | January 30, 2012, 5:27AM

Mitt Romney and his wife, Ann.

When Mitt Romney tries to avoid scrutiny for his exceptionally low effective tax rate by noting that, in absolute terms, he's paying "a lot" in taxes, he won't be fooling most of his political colleagues. It takes a special kind of affluence to reduce one's tax burden so dramatically. And despite their significant wealth most recent Presidential candidates have paid significantly more in taxes as a percentage of their incomes in the year (or two) before their campaign.

The exception is John Kerry. Though Kerry himself had a modest income (for a politician) his wife, Teresa Heinz, comes from great wealth and, like Romney, made millions in investment income in 2003 -- the year she and he both released their tax returns. Together, their effective tax rate was a bit lower than Mitt and Ann Romney paid in 2010.

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Taxes

Senate Democrats Plan To Put Republicans On The Wrong Side Of The Middle Class

Brian Beutler | January 25, 2012, 3:11PM

Senate Democrats are preparing an aggressive legislative agenda to complement the vision President Obama outlined in his State of the Union Address. The goal is to test the idea that the public supports an agenda of aggressive federal action on behalf of the middle class, and that Republicans are locked in a pattern of reactionary opposition, even to popular policies.

The push is premised on the notion that the country has turned the corner on the fights over deficits and the size of government, and that keeping issues of equity and opportunity for the middle class at the center of the national debate will redound to Democrats' political benefit, either by breaking the GOP or by putting them on the wrong side of public opinion.

But in an extremely consequential election year, when consensus becomes an endangered species on Capitol Hill, it will take a groundswell of political pressure to force either party to work with the other on a substantive agenda. So expect the Dems to hawk these issues relentlessly.

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Eric Cantor

Cantor: Health Care And Tax Fights Will Be Decided By The Election

Brian Beutler | January 23, 2012, 3:51PM

House Majority Leader Eric Cantor (R-VA) urges the Senate to vote on the house-passed jobs bill during a news conference on Capitol Hill in Washington, D.C. on October 27, 2011.

At a briefing with a handful of reporters in his Capitol suite Monday afternoon, House Majority Leader Eric Cantor outlined the coming year on Capitol Hill -- one he said would be marked by increased oversight of the Obama administration; an ongoing debate between the parties about how best to grow the economy; and what he called a bipartisan effort to prevent automatic cuts to defense spending from kicking in at the end of the year.

But the two issues that have most divided the parties since President Obama took office -- the two most consequential pieces of the budget and the U.S. economy -- will most likely be decided by the election.

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Rick Santorum

CHART: Santorum Calls For Tiny (Huge!) Tax Cuts For The Poor (Rich)

Brian Beutler | January 19, 2012, 3:50PM

The Tax Policy Center in DC has released numbers Rick Santorum's tax plan -- the latest, and perhaps final, in a series of analyses of the leading GOP contenders' tax plans.

It's a variation on the theme underlying all of the Republicans' tax proposals -- its impact on the middle class is trivial compared to the massive tax cut it proposes for the wealthiest Americans.

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Mitt Romney

Here's What Romney's Unreleased Tax Returns Almost Certainly Hide

Brian Beutler | January 5, 2012, 5:32AM

Mitt Romney still says he's unlikely to publicly release his tax information, even if he clinches the Republican presidential nomination, and Democrats have a pretty good idea why.

Romney is a privileged poster child for the "Buffett Rule" -- President Obama's principle that the tax code should make it impossible for a person of great wealth to pay a lower share of their income in taxes than ordinary people. The DNC knows it, policy wonks know it, Romney certainly knows it. But the reasons why are technical and illustrate just how different Romney is from the vast majority of Americans who will cast votes for him -- in either the GOP primary or the general election.

One tax expert told TPM of "fairly sophisticated tax strategies" that would be "not available to ordinary tax payers." A technique that puts you in a position that's "like having an unlimited 401k account" sounds very attractive. But maybe not if you're running for office, for Pete's sake.

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2012

Why The Policy Battles Of 2011 Won't Be Settled Until After The 2012 Elections

Brian Beutler | December 29, 2011, 2:25PM

House Speaker John Boehner (R-OH) and President Barack Obama

When President Obama and the GOP's primary contenders talk up the 2012 election as a choice for voters between two visions for the country's future, it's only about half hyperbole.

We'll see a prelude of this fact in the months between now and November both on the campaign trail and on Capitol Hill as politicians club each other with their past votes and statements on taxes, Medicare, Social Security, and other potent issues. But it's not just rhetoric.

To an unappreciated extent, the legislative whipsawing in 2011 has set the country and the parties up for a major reckoning about the role and size of government at the end of next year. And the outcome of the election will help determine which side of the argument wins.

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Newt Gingrich

CHART OF THE DAY: Gingrich Tax Plan Would Codify Lower Taxes On Rich Than On Middle Class

Brian Beutler | December 13, 2011, 5:04AM

Newt Gingrich addresses a tea party rally in Staten Island, NY on December 3, 2011.

On Monday, the Tax Policy Center published an analysis of Newt Gingrich's plan to overhaul the tax code -- the latest in a series of of analyses of GOP presidential candidate tax proposals. And like all the plans that came before it, Gingrich's constitutes a massive tax cut for the rich. Indeed, no matter how you stack the numbers, Gingrich wants a tax system that permanently holds tax rates on the highest earners lower than tax rates on the middle class.

There are a lot of ways to parse the data. Gingrich proposes creating an alternative tax system that would significantly flatten the code, while keeping the current one in place as an option. So you can run the numbers assuming everybody jumps into the new system, or you can run them assuming that the only people who hop into the new system are people who would benefit financially as a result. And you can compare Gingrich's plan to current tax policy -- including the Bush tax cuts and other temporary tax policy -- or you can compare it to current law, which assumes all of these policies will expire in the next year, and go up on just about everyone.

To be as fair as possible, let's take Gingrich at his word that he would extend the Bush tax cuts for those staying in the current system, and that the only people who would opt into the new system are those who would pay lower taxes as a result.

Here's what happens to people's average federal tax burden as a result.

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Payroll Tax Cut

Democrats' Big Payroll Tax Cut Gamble

Brian Beutler | December 8, 2011, 5:45AM

If this year's payroll tax cut is extended -- and possibly expanded -- for another year, it will prevent the economy from taking a significant hit at a time when demand is weak and unemployment remains unacceptably high.

That's the good news.

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Patty Murray

Patty Murray: The One Percent Aren't 'Job Creators'

Brian Beutler | December 7, 2011, 10:33AM

Super Committee Members John Kerry and Patty Murray

Former Super Committee co-chair and head of Senate Democrats' 2012 campaign effort Patty Murray will take on the GOP myth that the wealthiest Americans are "job creators" -- and therefore must be protected from higher marginal tax rates.

In prepared floor remarks sent my way, Murray will argue that the GOP has this exactly backwards, and that middle class workers need more money in their pockets -- not the highest earners.

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Jon Kyl

Top Republican: We'll Only Extend Payroll Tax Cut If You Extend Bush Cuts Too

Brian Beutler | December 5, 2011, 5:45PM

Sen. Jon Kyl (R-AZ)

The top Republican vote counter in the Senate says extending the expiring payroll tax holiday is a terrible idea and he'll only do it if Democrats agree to major concessions -- in particular, simultaneously extending all the Bush tax cuts, which are scheduled to expire just over a year from now.

On the Senate floor Monday, Sen. Jon Kyl argued that reducing the payroll tax doesn't stimulate the economy -- a claim most economists disagree with -- and criticized the Democrats' plan to offset the cost of the tax holiday with a small surtax on millionaires.

"We should therefore only do it under circumstances that in effect override these objections, one of which would be to extend all of the taxes that expire at the end of next year -- at the end of 2012," Kyl said. "That would be a good idea."

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Payroll Tax Cut

GOP In Knots Over Offsetting Payroll Tax Cut

Brian Beutler | December 5, 2011, 12:29PM

House Speaker John Boehner (R-OH) and Houser Majority Leader Eric Cantor (R-VA)

A lot of rank and file Republicans are unhappy that their leaders have vowed to renew the temporary payroll tax cut one way or another. But nearly all of them say that if the tax holiday is renewed (or possibly even broadened) the money will have to be offset with spending cuts elsewhere in the budget.

This stands in total contrast to GOP views about permanent income tax cuts. So they're cooking up arbitrary distinctions to justify the double standard.

In U.S. News Monday, Rep. David Schweikert (R-AZ) tests a couple different arguments.

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Super Committee

GOP's False Claim Of Proposing Higher Taxes On The Rich Spreads (VIDEO)

Brian Beutler | November 22, 2011, 2:34PM

This is how bad information spreads. Channeling Washington Post columnist Robert Samuelson, Mort Zuckerman -- the billionaire real estate and media mogul -- claimed on MSNBC Tuesday that Republicans on the super committee had broken with their anti-tax orthodoxy and proposed to increase taxes, modestly, on upper income Americans.

Here's Zuckerman:

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Super Committee

Republican Acknowledges GOP Pushed Ryan Plan In Super Committee Negotiations

Brian Beutler | November 22, 2011, 12:34PM

Rep. Jeb Hensarling (R-TX)

If you're having a hard time buying that one party was more reasonable than another in the Super Committee negotiations, read Republican co-chair Jeb Hensarling's obituary for the panel in the Wall Street Journal. Specifically, check out this part about the GOP's big ask:

Democrats on the committee made it clear that the new spending called for in the president's health law was off the table. Still, committee Republicans offered to negotiate a plan on the other two health-care entitlements--Medicare and Medicaid--based upon the reforms included in the budget the House passed earlier this year....

Republicans on the committee also offered to negotiate a plan based on the bipartisan "Protect Medicare Act" authored by Alice Rivlin, one of President Bill Clinton's budget directors, and Pete Domenici, a former Republican senator from New Mexico. Rivlin-Domenici offered financial support to seniors to purchase quality, affordable health coverage in Medicare-approved plans. These seniors would be able to choose from a list of Medicare-guaranteed coverage options, similar to the House budget's approach--except that Rivlin-Domenici would continue to include a traditional Medicare fee-for-service plan among the options.

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Super Committee

Obama Issues Veto Threat On Bush Tax Cuts

Brian Beutler | November 22, 2011, 9:40AM

President Barack Obama

President Obama has threatened to veto any legislation that attempts to eliminate the automatic penalties for Super Committee failure. But on January 1, 2013 -- the same day the automatic, across the board spending cuts are scheduled to take effect -- all of the Bush tax cuts are set to expire. And the White House plans to use the threat of full expiration the exact same way they're using the threat of sequestration -- to force Republicans to accept a higher tax burden on wealthy Americans.

"He won't sign a full extension," said one Senior Administration Official at a White House background briefing for reporters on the Super Committee.

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Super Committee

FAIL: Super Committee Comes Up Empty

Brian Beutler | November 21, 2011, 4:48PM

Shutterstock/ Kajano

A whirl of last minute meetings and shuttle diplomacy weren't enough to help the 12-member deficit Super Committee reach agreement on anything. Late on Monday, co-chairs Jeb Hensarling and Patty Murray put the panel to bed in an official statement.

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Super Committee

CHART: The More Congress 'Fails' The More The Deficit Goes Down

Brian Beutler | November 21, 2011, 12:11PM

shutterstock/ gary718

The Super Committee is poised to fail after markets close on Monday -- which is to say the 12 members weren't able to agree on a package of new revenues and lower spending to reduce the deficit by at least $1.2 trillion over 10 years. That was their charge, and insofar as they didn't do what they set out to do, they "failed."

But if Republicans and Democrats keep failing to agree on this stuff for the next year and change, the result will be an extraordinary decrease in federal deficits -- many multiples of what the Super Committee was tasked with finding.

We've been over this before, but the point is actually stronger now than it was earlier this year, because of the outcome of the debt limit fight. Between the looming expiration of the Bush tax cuts and other temporary tax provisions ($4.8 trillion), a large, scheduled drop in Medicare physician reimbursement rates ($300 billion), the soon-to-be triggered penalties for Super Committee failure ($1.2 trillion), and the resulting savings on servicing the national debt ($900 billion), deficits are set to drop by over $7 trillion automatically, unless Congress affirmatively stops it. That's on top of the $1 trillion-plus dollars Congress banked in the debt ceiling fight.

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Super Committee

AFL Warns Super Committee Dems: Not One Vote For GOP Plans

Brian Beutler | November 18, 2011, 9:20AM

'Super Committee' members Sen. Patt Murray (D-WA) and Sen. John Kerry (D-MA), September 7, 2011.

So far Democrats and Republicans on the Super Committee have acted as voting blocs. And smart money is on the idea that any plan that can pass the committee will get substantial buy-in from both parties.

But for progressive groups there's a Doomsday Scenario where one deal-hungry Democrat defies his colleagues and votes with the entire GOP to pass a plan. The AFL-CIO is petitioning Dems to prevent that from happening.

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Super Committee

Super Committee Republicans Work The Refs

Brian Beutler | November 17, 2011, 5:10PM

If you're looking for evidence that Republicans aren't worried about actual federal deficits, look no further than their about-face on how to count the Super Committee's budget savings.

The details are technical, but crucial, so bear with me.

At the very end of the debt limit fight, Republicans crowed that the Super Committee's inherent design would make it difficult for the panel's Democrats to insist on tax increases. Because of how the Congressional Budget Office typically scores legislation, they argued, any attempt to raise marginal tax rates from their current Bush-era levels would actually score as a big tax cut and thus a budget buster -- a fact that would make it difficult for the Committee to hit its $1.2 trillion target.

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Bush Tax Cuts

Pelosi To Hensarling On Medicare: You've Got To Be Kidding Me!

Brian Beutler | November 17, 2011, 12:44PM

House Minority Leader Nancy Pelosi

With just six days left until the Super Committee deadline, House Minority Leader Nancy Pelosi (D-CA) acknowledged Thursday that the panel is unlikely to agree on the sort of broad deficit-cutting bargain she and other Democratic leaders have pushed for. And she made a strong case that the GOP's allergy to taxes is the reason her expectations have diminished.

Specifically, she responded to Republican Super Committee co-chair Jeb Hensarling (R-TX) who on Wednesday said Democrats would have to agree to dramatic steps -- such as partially privatizing Medicare -- before Republicans would agree to substantial new tax revenues.

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Super Committee

Can't Go Small Either! Republicans Rejected Private Dem Super Committee Offer

Brian Beutler | November 16, 2011, 8:04PM

Rep. Jeb Hensarling (R-TX) and Sen. Patty Murray (D-WA)

To hear Super Committee Democrats and Republicans talk about it, the parties really hit a wall early last week after each rejected the other's wildly different offer to cut about $2 trillion from deficits over 10 year.

But discussions continued until late into the week, when they stumbled again over much smaller goals, according to a Democratic aide.

The details, first reported by the Associated Press, underscore just how difficult it will be for the panel to reach an agreement by Monday, which GOP co-chair Jeb Hensarling cited Wednesday as the drop-dead date for the 12 members to act.

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Super Committee

CHART OF THE DAY: The Regressive Tax Plan Super Committee Dems Shot Down

Brian Beutler | November 10, 2011, 12:40PM

A new Democratic memo rips apart a GOP Super Committee proposal -- offered by Sen. Pat Toomey (R-PA) -- that would have reduced, and made permanent, Bush-era tax rates. Many of the key details of the plan remain undisclosed, even to Democrats, but they've included a table laying out all of the lower rates the GOP has proposed, and deduced from what's known that the changes would significantly reduce the progressiveness of the tax code.

Here's how. The GOP claims the plan would raise $300 billion in revenue, and also make the newer, lower Bush tax rates permanent. To accomplish this, simple arithmetic implies he'd have to raise a ton of tax revenue elsewhere. But since he objects to raising taxes on capital income, that would require him to slash deeply into credits and preferences that benefit lower and middle income taxpayers.

Democrats drew a comparison to a similar plan -- one with smaller tax cuts that has been scored by the Joint Committee on Taxation, and concluded:

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Super Committee

Report: Super Committee GOPers Agree To Violate Norquist Pledge...With A Catch

Brian Beutler | November 7, 2011, 4:12PM

Grover Norquist

Super Committee Republicans are floating a trial balloon that would produce new tax revenue, in apparent contravention of Grover Norquist's taxpayer protection pledge, according to Wall Street Journal editorialist Stephen Moore.

But as Moore explains that the offer has a catch:

One positive development on taxes taking shape is a deal that could include limiting tax deductions, perhaps by capping write-offs on charities, state and local taxes, and mortgage interest payments as a percentage of each tax filer's gross income. That idea was introduced on these pages by Harvard economist Martin Feldstein.

In exchange, Democrats would agree to make the Bush income-tax cuts permanent. This would mean preventing top rates from going to 42% from 35% today, and keeping the capital gains and dividend tax rate at 15%, as opposed to plans to raise them to 23.8% or higher after 2013.

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Rick Perry

CHART OF THE DAY: Rick Perry Proposes A Tax Plan Aimed At The One Percent

Brian Beutler | November 1, 2011, 11:49AM

Texas Gov. Rick Perry (R)

Recall that Rick Perry's so-called "flat tax" plan isn't flat at all, but rather an alternative tax system that would constitute a massive tax cut for the rich. For people above a certain income, his plan would be worth opting into, and for the rest of earners, it would make sense to stay in the current tax system.

The Tax Policy Center has posted data neatly illustrating this bug (or feature, depending on your point of view). Here it is in handy graph form.

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Jobs

Senate Dems Face Major Challenge On Key Part Of Obama Jobs Bill

Brian Beutler | November 1, 2011, 5:55AM

Senate Democrats will continue to force Republicans to filibuster popular pieces of President Obama's jobs bill in the days weeks ahead -- to bolster their narrative that Republicans would rather see the economy fail than help Obama, or raise taxes by even a fraction of a percent on millionaires and billionaires.

But sometime between now and the end of the year, Dems will either have to interrupt their strategy or risk watching as two key provisions that helped bolster the economy this year lapse, and threaten what's already expected to be modest economic growth in 2012.

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