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The Jehoshua Novels


Grand Bargain Blues

The New York Times passes on the news that Obama will go beyond the Beltway to seel his Grand Bargain legacy to the American people, and will “keep his grass-roots organization in place to ‘have the president’s back,’ as its members like to say, on the budget negotiations and other issues in the second term.”

Gaius at AmericaBlog has some insight into what “having the president’s back” may entail:

Here’s the ultimate Beltway insider, Bob Woodward, on Meet The Press with David Gregory. It seems that someone leaked Obama’s 2011 Grand Bargain memo to House Speaker John Boehner. First, Woodward’s on-air comment (my emphasis):

“This is a confidential document, last offer the president — the White House made last year to Speaker Boehner to try to reach this $4 trillion grand bargain.  And it’s long and it’s tedious and it’s got budget jargon in it.  But what it shows is a willingness to cut all kinds of things, like TRICARE, which is the sacred health insurance program for the military, for military retirees; to cut Social Security; to cut Medicare. And there are some lines in there about, “We want to get tax rates down, not only for individuals but for businesses.”  So Obama and the White House were willing to go quite far.”

Yes, “quite far” indeed.

Gaius also has some details from that leaked memo: $10 billion cut from higher education and $2 billion from nutritional assistance programs, $16 billion from TRICARE, $33 billion from civilian government employee retirement, Medicare spending reduced by $250 billion over 10 years by altering the eligibility age and increasing premiums, changing Social Security rises to using something called the Superlative CPI instead of the straight Consumer Price Index – it “takes into account the tendency for consumers to substitute products whose prices have increased more slowly for products for which prices have increased more rapidly” – and using that same new measure for all mandatory programs and all tax code calculations.

One thing that’s been notable this last week – Obama keeps talking about raised revenue, not raised tax rates. The NYT adds:

The president must use his leverage soon, some Democrats added, because it could quickly wane as Republicans look to the 2014 midterm elections, when the opposition typically takes seats from the president’s party in Congress.

In particular, Mr. Obama has to convince Republicans that he would veto an extension of the expiring Bush-era tax cuts for incomes of $250,000 and higher, said John Podesta, a chief of staff to President Bill Clinton who oversaw Mr. Obama’s 2008 presidential transition. The top tax rate of 35 percent would increase after Dec. 31 to 39.6 percent, the rate in place during the Clinton administration, raising about $1 trillion over 10 years.

“The Republicans think he caves,” Mr. Podesta said, “and he has to disabuse them of that.”

What is unclear is whether Mr. Obama might agree to extend the top income-tax rates if Republicans agree to raise revenue from wealthy taxpayers by limiting their deductions instead, as Mr. Boehner suggested last week. The president did not mention rates on Friday in his first postelection remarks on the budget talks, and people in both parties interpreted that as a sign of his bargaining flexibility.

Are you ready to “get the president’s back” on his Grand Bargain, Democratic partisans?

Update: Digby quotes Social Security expert Eric Kingston on that Superlative, also known as ‘chained”, CPI:

Today the chained CPI, if it’s implemented, will further reduce benefits. A woman who retires at age 65 living ’til age 75 will get a benefit of about $600 less in real dollars 10 years later at age 85, about $950 or so less at age 95 – if she lives so long – it would be roughly $1,400 less than it would have been if the chained CPI is put into effect.

She adds: “I can certainly see why, with the election over, Republicans like Bill Kristol are saying to take the deal. It’s a great deal for them.  I always figured they’d pull that trigger eventually. They aren’t that stupid.”

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