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December 03, 2012

Boehner’s Counter-Offer: How About the Ryan Budget? Bowles-Simpson? Help Me Out Here!

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John Boehner delivered a letter to the White House today about the fiscal slope, and I just find it to be weird. He starts off by calling the events of November 6 a “status quo election” where the American people expect a “fair middle ground” on fiscal issues (the fact that House Democrats got more votes than House Republicans, and could have taken the chamber but for factors like gerrymandering, didn’t enter into this). He then says that Republicans “presented (the White House) with a balanced framework of spending cuts and new tax revenue. Nobody has seen this and the White House has repeatedly said that Republicans have not presented them with anything specific.

Then, Boehner laments the terrible partisanship of the Geithner proposal, which he frames in ways favorable to the Republican position. He says that the spending cuts in last year’s debt limit deal should not count toward total deficit reduction, saying this “confuses the public debate.” So those spending cuts, $1 trillion strong, have vanished, and don’t count toward a $4 trillion goal (neither do war funding savings, even though they were included in the Ryan budget). Boehner also criticizes the inclusion of new stimulus in the package, despite the clear need for more work toward economic recovery.

Then there’s this curious line: “If we were to take your Administration’s proposal at face value, then we would counter with the House-passed Budget resolution.” Boehner proceeds to… propose the House-passed Budget resolution. That’s the one that includes the end of Medicare as we know it into a premium support program, the block-granting of Medicaid and food stamps, and massive layoffs and pay cuts for federal employees.

After introducing this into the debate, Boehner says, putting on his moderate face, that given the status-quo election, it would be unwise to propose these “absolutely essential” reforms that he just spent a full page describing in detail. This represents Boehner trying to be seen as the more reasonable actor in this debate. So after determining the essential nature of these social insurance slashes, Boehner drops them.

Then he casts about for off-the-shelf solutions to get through the fiscal slope. He name-checks the “Biden group” (which worked on cuts prior to last year’s debt limit deal), the Boehner-Obama discussions right before the debt limit deal, and the Super Committee. All of these failed miserably and came to no resolution, so then Boehner goes into left field and pulls out Bowles-Simpson.

He repeatedly calls this the “Bowles plan,” emphasizing the participation of the Democrat, rather than Republican Alan Simpson. He’s actually referring to a different plan put forth by Bowles in 2011. Boehner’s conception of the “Bowles plan” is very different from what Bowles-Simpson actually does. For one, Bowles-Simpson assumes that top marginal tax rates go up. But Boehner says specifically that new revenues in this plan, which totals $800 billion over ten years, “would not be achieved through higher tax rates, which we continue to oppose.” Instead, he endorses a concept of adding $800 billion through “pro-growth tax reform” that closes loopholes and deductions “while lowering rates.” So Boehner is still offering the ROMNEY plan as his counterpoint tax plan, where rates are lower and deductions are closed. The only difference is that it’s mildly revenue-positive, at $800 billion, rather than revenue-neutral.

On top of that, Boehner wants $900 billion in cuts in mandatory spending and $300 billion in discretionary spending. This actually equals the total spending cuts in the sequester, though almost all of those come out of discretionary spending rather than mandatory. Boehner doesn’t specify any of these cuts.

Boehner calls this plan an imperfect, “fair middle ground,” and asks that they begin work on it right away. It’s only $2 trillion in total deficit reduction, but if you add the $1 trillion in previous cuts through the spending cap and $1 trillion in war funding savings, you get to $4 trillion.

Dan Pfeiffer, on behalf of the White House, immediately rejected this:

The Republican letter released today does not meet the test of balance. In fact, it actually promises to lower rates for the wealthy and sticks the middle class with the bill. Their plan includes nothing new and provides no details on which deductions they would eliminate, which loopholes they will close or which Medicare savings they would achieve. Independent analysts who have looked at plans like this one have concluded that middle class taxes will have to go up to pay for lower rates for millionaires and billionaires. While the President is willing to compromise to get a significant, balanced deal and believes that compromise is readily available to Congress, he is not willing to compromise on the principles of fairness and balance that include asking the wealthiest to pay higher rates. President Obama believes – and the American people agree – that the economy works best when it is grown from the middle out, not from the top down. Until the Republicans in Congress are willing to get serious about asking the wealthiest to pay slightly higher tax rates, we won’t be able to achieve a significant, balanced approach to reduce our deficit our nation needs.

Harry Reid emphasized the inclusion of the Romney plan and the lower tax rates it envisions, saying it would “force middle class families to pay higher taxes.” And in fact Bowles himself disavowed his 2011 plan, arguing that “circumstances have changed.”

So basically, we’re nowhere. But we’re at least setting out the terms of the discussion. The Boehner offer just replaces the sequester with different cuts and raises $800 billion in taxes. The White House offer replaces the sequester with different cuts (actually less cuts), adds stimulus, and raises $1.6 trillion in taxes. And the debt limit, which Boehner did not address at all, still sits there in the middle of the debate. We have a bit of clarity – Republicans want lower tax rates, for one – but still a rather large impasse.

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