Jonathan Chait

Obama Still Wants To Cut A Terrible Deal

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Chuck Todd reports that President Obama still wants to make the Grand Bargain:

Boehner and Obama are, essentially, the lone voices in the room still advocating for the “grand bargain” (both believe it’ll be easier to pass, and they may have a point)...

The president desperately wants the big deal.  How much so? When Boehner informed the president last Saturday night that he had to publicly pull out of the “grand bargain” talks, the conversation took more than 30 minutes to wrap up. While neither side has given reporters the details of that conversation, draw your own conclusions as to why a call like that, initiated by Boehner to essentially “break up” from the grand bargain talks, took more than 30 minutes to conclude. The president needs a real deal as much if not more than congressional Republicans.

The contours of the $4 trillion Grand Bargain leaked publicly at the same time it leaked that Republicans wouldn't cut the deal, so it largely managed to escape the attention of liberals that Obama was prepared to cut a really terrible deal. I'm actually okay with the entitlement cuts I've heard as part of the bargain -- it's not what I'd do if I were king, but as far as the list of concessions to political reality, it's bearable. I'd like to see a plausible target for domestic discretionary spending, which seems to be getting squeezed to ludicrously low levels.

Obama apparently is demanding that Republicans accede to the phase-out of the Bush tax cuts on income over $250,000. In return for that $800 billion in revenue, Obama has reportedly offered multiple times that amount in spending cuts. This sounds like a massively asymmetrical bargain. To begin with, Obama is trading for tax increases that, unlike the spending cuts he proposes to support, are scheduled to happen anyway at the end of 2013 unless the House, Senate, and President agree to extend them.

What's more, as Nate Silver argues, Obama's position -- that deficit reduction should consist of mostly spending cuts with some tax hikes -- places him roughly equivalent to the median Republican voter, while the GOP no-tax position is off the charts. And if you move beyond taxes versus spending in the abstract, which is always the most conservative friendly way to frame a budget question, the imbalance grows even more stark. Entitlement cuts are massively unpopular, higher taxes for the rich are extremely popular. If the budget debate were a presidential election, it would be a contest between Republican Michelle Bachmann and Democrat Rick Perry.

The deal floated earlier to close loopholes in return for an extension of the Alternative Minimum Tax patch, plus spending cuts, seems decent. (Explanation here.) The Grand Bargain sounds like a disaster in the making. It's fortunate that Republicans are crazy enough to kill it, and distressing that Obama keeps trying to revive it.

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