Friday, June 24, 2011

Republicans Propose Bi-Partisan Plan to Cut Deficit, Bi-Partisan Meaning Republican Get Spending Cuts They Want, No Tax Increases on Wealthy Americans and Democrats Get Blamed for Cutting Vital Programs.

Sounds Bi-Partisan to Conservatives!

The Republicans representing their party in the negotiations with Vice President Biden for an agreement for Congress to raise the Debt Ceiling have pulled out of those negotiations.  While there has been no definitive news on what is happening, it is fairly clear from statements and what news has come out that the following is happening.

  1. Massive cuts in social programs have been proposed by Republicans and accepted by the Democrats.  From the Washington Post we have

Biden and six lawmakers from both parties had tentatively agreed to more than $1 trillion in savings, according to people familiar with the talks, and had just begun to burrow in to the toughest issues: Democratic demands for defense cuts and higher taxes and Republican demands for sharp cuts to health and retirement programs.

The spending cuts may well be into the $2 trillion to $4 trillion range, over ten years.

2.      Democrats are proposing tax increases.  This is simply not acceptable to Republicans.  Their idea of bi-partisanship is related solely to their position.  Senate Minority Leader

McConnell said: “President Obama needs to decide between his goal of higher taxes, or a bipartisan plan to address our deficit. He can’t have both.”

Exactly how a deal with the Republicans getting everything they want and the Democrats getting none of what they want is “bi-partisan is something Mr. McConnell did not explain.

3.      Regardless of what any negotiators, including the President decide, a tax increase cannot pass the Congress.  The votes are not there, they will not be there when the debt ceiling requires the government to stop spending money, they may never be there in the foreseeable future.  This is not economic policy, this is political reality.

4.      The ultimate deal is likely to have Obama agreeing to spending cuts, and stating that he had no choice, that Republicans were holding the country hostage and he had to accept their position.  This is the same position that Obama took at the end of 2010 when he agreed to extend Bush era tax cuts on the wealthy, something he had campaigned against.  History does sometimes repeat itself.

The ironic thing is that the country seems to support higher taxes on wealthy Americans as part of solving the deficit and debt ceiling problem.  This irony, however, may be lost on Mr. Obama.  The subsequent political fallout, however, will not.

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