Harry Reid Calls House Republicans Bluff
By Matthew Yglesias on Jul 25, 2011 at 9:59 am
Something you often see in negotiations is a mismatch between one sides stated sticking points and its real sticking points. In the debate over the debt ceiling, for example, Republicans have sought to portray themselves as having two bottom lines. One is that any increase in the debt ceiling must be met dollar-for-dollar with spending cuts. The other is that no revenue increases can be part of the deal. What Harry Reid did yesterday was essentially call the GOPs bluff by outlining a plan that raises the debt ceiling by $2.7 trillion and includes $2.7 trillion in spending cuts, a healthy share of which comes from winding down the wars in Iraq and Afghanistan.
Republicans are rejecting this even though it nominally meets their demands. Why? Because it doesnt achieve either of their two real objectives. In particular, the plan doesnt cut Medicare, which means that Democratic party candidates for office in November 2012 and 2014 can accurately remind voters of the content of the Republican budget plan. In case you forgot, this plans repeals Medicare. Having repealed Medicare, it then gives seniors vouchers to purchase more expensive private health insurance. And having replaced Medicare with a voucher system, it then ensures that the vouchers will grow steadily stingier over time. It was only after voting for this plan that Republicans seem to have realized that repealing Medicare is unpopular. Since that time, theyve been trying to entrap Democrats into reaching some kind of Medicare détente with them, which would immunize them from criticism. Reids plan doesnt do that.
Second, while Reids plan doesnt raise taxes, it also doesnt take tax increases off the table. Currently, the Bush tax cuts are scheduled to expire in 2012. If Reids all-cuts plan passes, that still leaves the door open to significant revenue increases. Now that doesnt mean this is brilliant 11-dimensional chess. The Reid Plan is consistent with substantial revenues coming online in 2012, but that will only happen if President Obama and Senate Democrats stand firm and play hardball on the tax issue. Back in December 2010, they utterly failed to do so.
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Now I would love this plan, if I knew Obama was 150% behind letting the Bush tax cuts expire. But I don't see that happening so........we still aren't anywhere. This process seems to be going no where fast.