December 5, 2012

Obama Versus Boehner

When it comes to politics or anything else, my theory is that whoever frames the question will win the debate. Take the fiscal cliff. Republicans emphasize spending reductions, including immediate cuts for entitlement programs such as Medicare and Medicaid and future restraints on Social Security. Democrats emphasize revenue increases, including asking the top 2 percent to pay higher taxes than they do now.

Republicans want Americans to focus on the economy and job creation, a reasonable enough proposition. Democrats want people to think about fairness and sharing the burden, something deeply ingrained in the American ethos. Republicans offer cuts on Medicare and Medicaid. Democrats say let the rich pay a bit more. If question becomes which Americans take the biggest hit, the old and the poor and the sick or the top 2 percent income earners, well, you tell me, who is going to win that argument?

Before we go any further let's look at how things stand as of the moment. Both President Obama and Speaker of the House John Boehner have made preliminary offers, neither of which are intended as anything more than a sense of what chips are out there for bargaining.

President Obama:
  • Raise tax revenues by nearly $1.6 trillion ($960 billion over the coming decade by increasing tax rates and taxes on investment income on upper-bracket earners, and $600 billion in additional taxes).
  • Add $200 billion in economic stimulus from a combination of investments including infrastructure spending, extension of a payroll tax cut and jobless benefits.
  • Continue individual income tax cuts from the administration of former Republican President George W. Bush for all but the wealthiest earners.
  • Authority to raise the nation's borrowing limit unilaterally.
  • Delay across-the-board spending cuts for a year in exchange for future cuts of  $600 billion to entitlement programs.
Speaker Boehner
  • Raise tax revenues $800 billion through tax reform from unspecified closing of tax loopholes, unspecified eliminations of tax deductions, and reform of the tax code that would actually lower the current top tax rate, but with no higher taxes on the top 2 percent.
  • Unspecified healthcare program savings of $600 billion from health care cuts from Medicare and Medicaid;
  • Other savings from changes to unspecified mandatory spending programs of $300 billion;
  • Tying cost-of-living increases for federal benefit programs (i.e., Social Security) to the Consumer Price Index to get savings of $200 billion;
  • Further unspecified savings to domestic spending programs of $300 billion.
Republicans emphasize spending cuts over revenue increases. Democrats emphasize revenue increases over spending cuts. Both offer some suggestions as to what that might entail, but the words unspecified and future appear frequently in both proposals. The point here is not to come up with a final proposal. The goal is to frame the debate for the American people. What resonates with most voters: raising the tax rates for the top 2 percent wealthiest Americans or cutting entitlement programs that most Americans are entitled to?

If all of this sounds familiar, it should. We already had this exact debate during the presidential election. If I recall correctly, the president won that election convincingly, running on a specific program of keeping the Bush tax cuts for all but the top 2 percent. The president can fairly say that the American people have spoken on this issue.

Republican can insist that the idea is a bad one, that it will hurt the economy and stifle job creation. Who knows, they may even be right, although the idea that small business would be hit under Obama's plan is true only because many small businesses declare their income as personal income rather than as corporate income in order to get a tax break. Depending on which study you look at, only 3 percent to 7.5 percent of small business owners would be affected by Obama’s plan.

The real problem, as I see it, is not finding some common ground for compromise. That's what politicians do. Most of them, anyway. The House Republicans contain within them a highly fractious minority that refuses to go along with the plan, even if it is their own party's plan. If Boehner can't control them, then we are definitely headed over the cliff.

What's really dumb about this is that if we do go over the cliff, then everyone's taxes go up. Instead of worrying about the 2 percent, Republicans will have the 100 percent to contend with. If you want a sure-fire recipe for losing control of the House in 2014, this will do until a better one comes along.

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