Wonkbook: Tax cut negotiations off to bad start; two more deficit plans (now with added stimulus!)
Tis the season for plans...to cut the deficit? Apparently so. The group headed by Alice Rivlin and former senator Pete Domenici are throwing their effort into the ring today, and Rep. Jan Schakowsky added her progressive alternative to the pile yesterday. So that's three big deficit reports in about two weeks. And if you're paying close attention, you'll notice that both Rivlin and Schakowsky are members of the commission Simpson and Bowles are chairing, which perhaps says something about their confidence in that process.
The thing you're supposed to say about these plans is that the devil is in the details, but it's really not. Balancing the budget is not impossible as a matter of policy ingenuity. You add stuff here, subtract it there, and set down a magic asterisk whenever necessary. It's impossible as a matter of politics. The devil, in other words, is in the votes.
And both of these plans have something that Simpson-Bowles doesn't, but that may be important for getting those votes: Further short-term stimulus. That makes sense from a deficit perspective, as if we can get growth moving again, we won't have to do as much deficit reduction. But it also makes sense from a political perspective, as it's something liberals actually want, and so has some real potential as part of a deal.
Negotiations between the White House and Congress on extending the Bush tax cuts are not off to a good start, report Lori Montgomery and Anne Kornblut: "The bipartisan White House meeting President Obama had hoped to hold this week to discuss tax cuts and other matters has been postponed, officials said Tuesday...The White House said in a statement Tuesday night that the meeting had been rescheduled 'at the request of Senate Minority Leader Mitch McConnell and House Minority Leader John Boehner due to scheduling conflicts in organizing their caucuses.' The meeting will instead be held on Nov. 30, the White House said."
A vote just on extending tax cuts for under-$250,000 earners is still possible: http://wapo.st/bcg7SH
Though the incoming GOP chair of the Ways and Means Committee would oppose it proposal extending only middle-class tax cuts, reports Martin Vaughan: "Rep. Dave Camp (R., Mich), said during a Tuesday speech that Republicans will insist on the same period of extension for all of the expiring tax cuts, or go home without extending any of them."
Another day, another deficit plan, this time from former Sen. Pete Domenici and former OMB head Alice Rivlin -- and this time, including stimulus: "To ensure a more robust recovery, we propose a one-year "payroll tax holiday" for 2011, suspending Social Security payroll taxes for employers and employees. We also would phase in the steps to reduce deficits and debt gradually beginning in 2012, so the economy will be strong enough to absorb them...We would control health-care costs - the biggest driver of long-term deficits - by reforming Medicare and Medicaid while, starting in 2018, capping and then phasing out the tax exclusion for employer-provided health care. We would reform medical malpractice laws and help address the health costs tied to rising obesity by imposing a tax on high-calorie sodas."
Rep. Jan Schakowsky, a member of the president's fiscal commission, also has a debt reduction proposal, reports Lori Montgomery: "Schakowsky's proposal, which she described as hers alone, embraces the bipartisan goal of cutting spending. However, she proposes to take virtually all of the cuts from the military, slicing $110 billion from the defense budget in 2015 by reducing troop levels, cutting weapons systems and scaling back wartime spending...Meanwhile, tax collections would soar by more than $280 billion in 2015 under the plan, mainly by eliminating various corporate tax breaks, ending the Bush tax cuts for the wealthy and creating a new energy tax through the cap-and-trade system envisioned in Obama's budget request...Schakowsky's plan calls for an additional $200 billion in economic stimulus over the next two years to create jobs and combat unemployment."
Sen. Bob Corker and Rep. Mike Pence want the Fed to only focus on inflation, not unemployment, reports Neil Irwin: "The changes proposed by Corker and Pence would align the Fed's legal marching orders with those followed by most other foreign central banks. For example, the European Central Bank is charged with maintaining inflation just under 2 percent but has no formal mandate to prevent joblessness. A Fed spokeswoman said Tuesday that the central bank is not seeking a change in its mandate, and that the current policy is 'appropriate.' However, some presidents of regional Fed banks are more open to the idea that the central bank would be better off with a narrower mission, like its counterparts abroad."
Got tips, additions, or comments? E-mail me.
Brit-rock interlude: British Sea Power play "Apologies to Insect Life" live.
Still to come: Half a percentage point more of economic growth would mean 40% to 50% less deficit reduction; Congressional complaints aside, most Americans take longer than freshman representatives to get health care at a new job; Obama supports a push for a vote on the DREAM Act; the Senate won't vote on a bill boosting electric vehicles; and Barack Obama interacts with a Japanese humanoid robot.
The best deficit reduction plan is economic growth, writes David Leonhardt: "If the economy grew one half of a percentage point faster than forecast each year over the next two decades — no easy feat, to be fair — the country would have to do roughly 40 to 50 percent less deficit-cutting than it now appears...To get a concrete sense for what this would mean, you can play around with the The Times’s online deficit puzzle. It asks you to find almost $1.4 trillion in annual spending cuts and tax increases by the year 2030. If growth were a half point faster than expected, the needed savings would instead drop to less than $700 billion."
The House may try to override Obama's veto of a bill making it harder to challenge foreclosures, reports Nick Timiraos: "The vetoed bill, sponsored by Rep. Robert Aderholt (R., Ala.), would require notarizations of mortgages and other documents, including those done electronically, that are done in one U.S. state to be accepted by courts in another state. The House approved the bill in April by a voice vote, and the Senate passed it unanimously in late September. But Mr. Obama returned the bill to Congress without his signature last month as concerns mounted over the unintended impact the measure could have on consumer protections amid growing problems with foreclosure documentation."
The GOP cares more about upper-income tax cuts than job growth, writes Steven Pearlstein: "If Republicans were truly interested in reducing the deficit while stimulating private-sector job creation, they would have jumped to embrace the idea floated last week by Sen. Mark Warner, the centrist Democrat from Virginia: let high-end tax rates return to where they were during the Clinton years and use the $65 billion in additional income over the next two years for tax breaks for businesses that increase investments or hire new employees. After that, the extra revenue would go toward deficit reduction. And how many of Warner's Republican colleagues have called to express interest in his idea? So far, not a one."
Ben Bernanke and Tim Geithner deserve credit for averting economic catastrophe, writes Warren Buffett: http://nyti.ms/c3flvR
Adorable animal operating a motor vehicle interlude: A sloth works a manual transmission.
Most Americans wait longer than members of Congress to get health care at a new job, reports Brian Beutler: "Rep.-elect (and physician) Andy Harris (R-MD) stood up at an orientation of newly elected members, flabbergasted that he'd have to wait a month for his government-provided private health insurance to kick in...According to the 2010 Kaiser Family Foundation annual survey of employer-provided health benefits, most workers would be lucky to start a new job in Harris' shoes...'The average waiting period among covered workers who face a waiting period is 2.2 months...Thirty-one percent of covered workers face a waiting period of 3 months or more.'"
Sen. Chuck Grassley prevented a bipartisan health care bill: http://wapo.st/9lFwJM
A Democratic member of Congress is asking Republicans to not claim their health benefits, reports Simmi Aujla: "'If your conference wants to deny millions of Americans affordable health care, your members should walk that walk,' Crowley writes in a letter to House Minority Leader John Boehner (R-Ohio) and Senate Minority Leader Mitch McConnell (R-Ky.). 'You cannot enroll in the very kind of coverage that you want for yourselves, and then turn around and deny it to Americans who don't happen to be Members of Congress. We also want to note that in 2011, the Federal government will pay $10,503.48 of the premiums for each member of Congress with a family policy under the commonly selected Blue Cross standard plan.'"
A new Dartmouth Atlas study shows that where and how patients die has more to do with the hospital than the patient: http://bit.ly/92dRvN
Obama wants the DREAM Act passed during the lame duck session, reports Sam Youngman: "The White House readout of the meeting said Obama wants to see passage of the DREAM Act during the lame-duck session...'Speaker Pelosi has indicated to me personally that she wants the House to move on the DREAM Act,' [Gutierrez] said. 'Majority Leader Harry Reid has consistently supported a DREAM Act vote during lame-duck, and now the president and I have had an opportunity to discuss the lame-duck strategy.'"
Sen. Jim Inhofe promises to defy the GOP's earmark ban: http://politi.co/bjLYOg
The Senate could vote on a food safety bill as early as today, reports Bill Tomson: "A different version of the bill passed the House more than a year ago, in July 2009, but it has had trouble making it through the Senate after small farmers expressed concern that the new regulations might disadvantage them. A bipartisan roster of senators is trying to push it through the Senate during the lame-duck session. A vote was tentatively set in the chamber for Wednesday that would move the bill to formal debate and allow consideration of amendments. The bill would give the FDA the power to mandate food recalls, keep better track of fruit and vegetable shipments so contaminated commodities can be found more quickly and set new standards for food manufacturers."
There could be a bipartisan coalition for defense cuts, writes Derek Thompson: "Sen. John McCain announced that he sees room for up to $100 billion in defense cuts, including the $400 million Lockheed Martin Corp F-35 fighter program. He has support from Tea Party celebrity Rand Paul, who recently won a Senate seat in Kentucky, and Sen. Tom Coburn, who has repeatedly called for cuts to the Pentagon budget. Meanwhile, the report from chairmen of the deficit commission called for aggressive cuts in the Pentagon's budget -- far more than the White House felt comfortable calling for when they proposed a non-security (ie non-defense, non-homeland security, non-veterans spending) discretionary budget freeze."
Intercultural exchange interlude: Barack Obama plays with Japanese robots.
The Senate won't vote on a pro-electric vehicle bill in the lame duck session, report Dan Berman and Robin Bravender: "The Senate was scheduled to vote on moving forward with the bill that is a pet project of oilman T. Boone Pickens. Reid (D-Nev.) scheduled the vote in September when he was in the middle of his contentious reelection bid. But a Reid spokeswoman said the majority leader and Sen. Orrin Hatch (R-Utah) want to wait on the vote, which was not expected to win the 60 votes needed in any event...Reid’s bill would provide tax incentives and loans for buying and building natural gas vehicles and $100 million to promote the deployment of plug-in electric vehicles."
The stimulus package's investment in solar energy is due to expire soon: http://bit.ly/a7iaHu
Likely House energy committee chair Fred Upton is sharpening his anti-Obama rhetoric, reports Robin Bravender: "The Michigan Republican laid out his ambitious agenda for the House Energy and Commerce Committee in a letter sent to fellow GOP lawmakers and incoming members yesterday, pledging to pursue a conservative agenda and to end 'the job-killing policies of Obama and Pelosi.'...Among his top priorities, Upton said, are repealing the Democrats’ health care reform law, conducting rigorous oversight of agency rules, aggressively cutting spending and ensuring that no federal funds go to abortion."
Closing credits: Wonkbook is compiled and produced with help from Dylan Matthews, Mike Shepard, and Michelle Williams. Photo credit: White House.
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