Each morning, Bill Scher and Terrance Heath serve up what progressives need to effect change on the kitchen-table issues families face: jobs, health care, green energy, financial reform, affordable education and retirement security.
MORNING MESSAGE: Capitulation
OurFuture.org’s Robert Borosage: ”No progressive can or should vote for this capitulation. Republicans have won big. They should be forced to produce the votes to pass this in the House. If they can’t, the president should do what he should have done from the beginning. Stop the negotiations, demand a clean lift of the debt ceiling, and invoke his constitutional powers to avoid default. If the deal passes the Congress, then congressional Democrats should insure that no Democrat named to the Gang of 12 will accept any agreement that does not include more revenues than spending cuts, while defending Medicare, Medicaid and Social Security from a rump process. Given Republican intransigence, that will force deadlock, triggering deep spending cuts that won’t go into effect until January of 2013. Americans can then decide in the election whether they want to vote for those who would gut Medicare and Social Security to protect tax breaks for the wealthy.”
Will Congress Pass It?
McClatchy spells out the deal details: ”Spending cuts of $900 billion over 10 years on discretionary items — primarily education, housing and transportation programs … Defense would be cut $350 billion … No tax increase, although overhauling the tax code would be part of future deficit reduction efforts. Any automatic cuts would start on January 1, 2013, the same day the Bush tax cuts are due to end … A new 12-member, bipartisan legislative committee to recommend further spending cuts, with the goal to come up with $1.5 trillion. If it fell short, the rest would be made up with automatic spending cuts, about half from defense … Social Security, Medicaid, unemployment insurance and civilian and military retirement would be exempt. Medicare cuts would be restricted to provider payments, and would be limited.”
Defections in Congress expected on left and right. W. Post: ”…liberal Democrats have seen this compromise coming, girding themselves for a deal they knew they would not eagerly embrace, although some may end up supporting it … House Republicans, however, have not been preparing their GOP foot soldiers for some of the unpleasant aspects of a compromise … The final piece of the puzzle … are some of Boehner’s closest allies, longtime veterans who serve on the House’s Armed Services Committee and Appropriations Committee. With more than 60 Republicans on those panels, those lawmakers have formed the backbone of support for Pentagon spending in the past two decades … while those lawmakers are the most likely to support any deal Boehner signs off on, the final bit of negotiation has included provisions that cut right at the heart of this group’s legislative portfolio.”
Leader Pelosi has yet to endorse. The Hill: ”…without the votes of at least some House Democrats, the agreement will not pass the lower chamber … it remains unclear how many Democrats will vote yes on the debt limit bill. Rep. Raul Grijalva (D-Ariz.), a co-leader of the Congressional Progressive Caucus, bashed the agreement on Sunday. Others are expected to follow his lead on Monday … A few of her deputies, meanwhile, have argued that Obama should invoke the 14th Amendment to raise the debt ceiling.”
Progressive groups oppose. Politico: ”MoveOn.org came out in opposition, and the Progressive Change Campaign Committee said 200,000 Obama 2008 supporters might withhold their support this time in protest.”
Bank lobby excited. NYT: ”‘This is huge,’ said Scott E. Talbott of the Financial Services Roundtable, an industry lobbying group. ‘It provides much-needed certainty during an uncertain economic time.’ Mr. Talbott said his group was still reviewing details of the deal, but would likely move forward with a lobbying blitz over the next two days.”
Battle lines now drawn for 2012 election. National Journal’s George Condon: ”…the president and the congressional leaders all but guarantee that next year’s campaign will feature a large and perhaps unprecedented debate over spending and budget priorities and the relationship between government spending and job creation. That’s a long overdue debate and, if conducted honestly, will allow the winner of the presidential election to claim a genuine mandate. But the bad news for Obama is that this deal – and his role in the deal-making – could make it more difficult for him to win a second term … The combination of a depressed base and a disillusioned center is potentially toxic to the president.”
Who Gets Hurt?
White House fact sheet proclaims: ”Bipartisan Debt Deal: A Win for the Economy and Budget Discipline”
NYT’s Paul Krugman deems the deal a “disaster”: ”It will damage an already depressed economy; it will probably make America’s long-run deficit problem worse, not better; and most important, by demonstrating that raw extortion works and carries no political cost, it will take America a long way down the road to banana-republic status.”
TNR’s Jonathan Cohn on who gets hurt: ”… there’s just no way to enact spending reductions of this magnitude without imposing a lot of pain … Pain means more people eating tainted food, more people breathing polluted air, more people pulling their kids out of college, and more people losing their homes …”
Jared Bernstein argues the deal is awful for jobs: ”$1 trillion in cuts in discretionary spending over 10 years … From a jobs perspective, a lot of infrastructure and investment in stuff like clean energy comes out of this part of the budget.”
NYT edit board reluctantly calls for support of a “terrible” deal: ”Democratic negotiators decided that the automatic cut system, as bad as it is, was less of a threat to the economy than another default crisis, and many are counting on future Congresses to undo its arbitrary butchering. Sadly, in a political environment laced with lunacy, that calculation is probably correct … this episode demonstrates the effectiveness of extortion. Reasonable people are forced to give in to those willing to endanger the national interest.”
Pivot to austerity worries economists. NYT: ”…most economists say the government should have waited a year or more for the economy to strengthen … The economy grew at an annual rate of only 0.8 percent during the first half of the year. Millions of homes remain empty. Twenty-five million Americans could not find full-time jobs last month. And even without the debt ceiling deal, federal spending is in rapid decline. Little remains of the federal stimulus money. Payroll tax cuts are set to expire at the end of the year. The combination of the budget-cutting government’s plans and the grim economic news is likely to increase pressure on the Federal Reserve…”
But will any of the cuts actually happen? TNR’s Walter Shapiro: ”…during the late 1980s under two Republican presidents, the White House and Congress used a series of gimmicks to make sure that the Gramm-Rudman slicer was never turned on … The Gramm-Rudman precedent is the only thing that leaves me with a glimmer of long-term optimism as Barack Obama and the congressional Democratic leadership have signed on to what appears to be the worst deal since a cash-strapped Napoleon proposed the Louisiana Purchase.”
Katrina vanden Heuvel predicts populist backlash, in W. Post oped: ”…he values and priorities of most Americans were early casualties. That reality will drive — no matter what the resolution this week — new, independent citizen mobilizations challenging both Republican zealotry and Democratic cravenness.”
Will The Bush Tax Cuts Survive?
WH insists that Bush tax cuts for the wealthy will end. The Hill: ”[White House] officials said that no matter what, the Bush tax cuts for the rich will end, whether by veto if Republicans push them along, by the failure of the super committee for tax reform to act or when they expire in January 2013.”
W. Post’s Ezra Klein urges Democrats to let all Bush tax expire, on wealthy and middle class: ”On Dec. 31, 2012, three weeks before the end of President Barack Obama’s current term in office, the Bush tax cuts expire. Income tax rates will return to their Clinton-era levels. That amounts to a $3.6 trillion tax increase over 10 years, three or four times the $800 billion to $1.2 trillion in revenue increases that Obama and Speaker John Boehner were kicking around. And all Democrats need to do to secure that deal is…nothing.”
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