Tuesday, June 28, 2011

Will we raise the debt ceiling in time? Do Republicans care?

The latest on the debt ceiling talks from Ezra Klein:
A bit more information has trickled out over the last few days detailing the exact state of the budget negotiations when they collapsed. Both sides, as they often said, were shooting for about $2.4 trillion in deficit reduction over 10 years. They'd already agreed on around $1 trillion in spending cuts and were making good progress on the rest of it. But Democrats insisted that $400 billion -- so, 17 percent -- of the package be tax increases. And that's when Republicans walked.

Specifically, the Obama administration was looking at a rule that lets businesses value their inventory at less than they bought it for in order to lower their tax burden, a loophole that lets hedge-fund managers count their income as capital gains and pay a 15 percent marginal tax rate, the tax treatment of private jets, oil and gas subsidies, and a limit on itemized deductions for the wealthy.

It's almost not worth going into the details on those particular tax changes because the Republican position has held that the details don't matter: well-designed tax increases won't be looked at any more favorably than poorly designed tax increases. The point, Republicans say, is that there can't be any tax increases, full stop.

For now, Democrats are holding their ground. "Do we perpetuate a system that allows for subsidies in revenues for oil and gas, for example, or owners of corporate private jets, and then call for cuts in things like food safety or weather services?" Press Secretary Jay Carney asked. But at some point, this will cease to be a clean choice between two budget plans and begin to be a question over whether we can raise the debt ceiling. And that, Republicans are betting, is when the Democrats will stop holding their ground.


First of all, not raising the debt-ceiling would be economic suicide. Second, reducing the deficit now is not going to reduce it later. It will only cause more economic hardship which will cause revenues to fall. Third, if you are going to reduce the deficit anyway, why on earth would you walk out because of a tax break for those who own private jets?! I understand the Republicans want smaller government, which means no tax increase on anyone, but that means cutting important programs (such as TANF) for the less well off.

Obama is even comprising on the budget talks, something I haven't seen from Republicans who continue to hold their ground and flirt with disaster counting on the Dems to change their stance. From Sam Youngman:
President Obama, seeking a Republican agreement to raise the nation's $14.3 trillion debt ceiling by Aug 2, will not insist that any deal include an end of President Bush's controversial tax rates on the wealthy.

Obama's tactics are coming into clearer focus: they involve seeking higher taxes not on a broad swath of high income earners but on a narrower band of the super rich, such as owners of private jets. This means that those who earn $250,000 have got a reprieve.

Why would a bunch of social conservatives, who I assume care deeply about human life at all stages because they oppose abortion and euthanasia, rather cut assistance to those in need in favor of a tax break for the super rich?

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