The Democrats, demands McConnell, must either cut Medicare and Social Security or they will not allow the debt ceiling to be raised and allow the economy to blow up-it would lead to something like a 6% drop in GDP.
Better still, they must provide the Republicans cover on these cuts. The GOP truly is the chicken hawk party:
"Sen. Minority Leader McConnell reiterated his position this morning: Government will shutdown unless President makes dramatic cuts to Medicare and Social Security."
"In other words, big cuts to key social insurance programs are not only the price of avoiding what would likely be a catastrophic government shutdown (a real one, not like what we had back in the 90s). But Democrats must also shield Republicans from the political consequences of cutting these programs by cutting them on the Republicans behalf."
"That’s a pretty big ask, no?"
http://talkingpointsmemo.com/archives/2013/01/so_does_this_work.php?ref=fpblg
As to the question of the above linked post-does this work?-the answer is clearly not. The truth is that the GOP doesn't have the leverage on the debt ceiling that they want to believe as we've noted previously.
http://diaryofarepublicanhater.blogspot.com/2013/01/debt-ceiling-chicken-and-wny-gop-is-not.html
Greg Sargent has pointed out that they are literally hostage takers and that one core delusion of hostage takers is that they wrongly presume themselves to have much more control over the situation than they have.
Sumner actually makes this point very succinctly:
"I recently had a contest asking commenters to find an article or blog post on the fiscal cliff deal that did not contain factual errors regarding the change in tax rates. No one succeeded, even my own blog post contained errors. And so does the David Henderson post that I’m about to comment on, although it’s far better than most. I sometimes have the feeling that the press doesn’t even care what the truth is. I also think people are being far too kind to the Congress. This is a terrible bill, and should be roundly ridiculed and mocked. Consider the following analogy:
"Suppose Congress declared April 15th to be “handheld calculator regression day.” All Americans had to go to a public building and sit there all day doing complex regression analysis using simple hand held calculators, for no reason art all (I did regressions like this in the 1970s, BTW.) Obviously there’d be outrage. Now consider a recent post by David, who defends the bill as the best the GOP could have gotten:
Most of the criticisms that Scott Sumner and Steven Landsburg make are ones I share. So I’m not judging the tax bill to be good. Viewed in a political vacuum, it sucks. Viewed in the world we’re in, it’s actually a pretty good bill. . . ."Maybe I’m reading between the lines, but I wonder if David assumes that I view the GOP as the good guys, and the only question is whether they were able to hold back the evil Dems, who favor much higher taxes. In fact, I see the GOP and the Dems as both favoring big government, both being the bad guys. Recall that when the GOP took all three branches of government for the first time in my lifetime (in 2001) they went on an orgy of spending, after 8 years of pretty reasonable fiscal policy under Clinton."
Think about the context. Republicans, who, since 1981 have been the anti-tax-increase party, hold only the House of Representatives. The President, who is very hostile to high-income people and very strongly in favor of double-taxing savings, was just re-elected. The Democrats hold the Senate.
Had the Republicans held out for anything like the reforms that Sumner and Landsburg wanted, the bill would have been Dead on Arrival in Harry Reid’s Senate.
"Now let’s examine my criticism of the phase-outs. These require taxpayers to do all sorts of complex mathematical calculations for no reason at all. It’s just busywork. These don’t bring in more revenue than you’d get from slightly higher MTRs, and they don’t affect the progressivity of the tax code. Suppose the phaseouts bring in $100 billion. Is David suggesting that Obama would not have accepted the following deal from the GOP:
“Mr. President, your proposed phaseouts bring in $100 billion from the people in the $250,000 to $400,000 income range. We propose instead that the MTRs on that group rise from 33% to 35.7% (or whatever is needed.) This increase would make the tax system far simpler, bring in equal revenue, and be just as progressive.”
"Is David saying Obama will refuse that deal? Indeed Obama is just as guilty as the GOP, for not proposing it. Why didn’t it happen? Perhaps the GOP was concerned with public relations. Maybe they wanted to hide the fact that they were caving in to Obama and signing off on raising taxes on everyone making over $250,000 per year, and all the know-nothings in the press and blogosphere played along, parroting the GOP lies."
"I also discussed the higher MTRs. As I noted in my post, I think you could argue that the upper middle class and rich should pay rather high MTRs on their wage income. At least as long as we have government spending at these levels. And as I said, the GOP favors big government, indeed they increased the size of Medicare, federal aid to education and homeland defense under Bush. They want an even more bloated military, agricultural price supports, space program. etc. What the GOP doesn’t realize is that these things have to be paid for."
"But let’s accept David’s premise, and see if the GOP could have done better in holding down MTRs. I claimed that their big mistake was made in 2011, when they might have latched on to Schumer and Pelosi’s proposal to just raise taxes for those making over a million dollars a year, and make the other tax cuts permanent. Obama wanted a deal to cement his re-election. But they never tried. They refused to even discuss any tax increase at all."
"A bit later I suggested the GOP would lose the 2012 election and end up with a far worse deal from their perspective, which is what happened. So on the basic question of size of government, the GOP blew it in 2011, n0t 2013. I certainly agree with David that the size of the tax increase in dollar terms is about the smallest the GOP could have gotten in 2013. My criticism lay elsewhere."
If you've read me at all, you know I far from agree with Sumner on all points. In this post he again goes overboard about the so-called "marriage penalty" which my guess is basically a wash: some people do better being married some do better being single-tax wise. I find it hard to believe that people would actually divorce-he claims he knows people who have done this-just to save money on their taxes. It seems to me that such marriages have rather shaky foundations to start with.
He's certainly right though that the GOP would have been better off had they taken the deal Obama and the Democrats were offering in 2011. Democrats like me scoffed at Boehner's Plan B where the higher rates would hit only income above $1 million but in 2011 that was the offer of people like Pelosi and Schumer. Back then most Democrats-certainly me-would have taken $1 million and thought of it as a win. He's also right that the GOP insisted on raising rates on those making between $250,000-$400,000 via limiting deductions rather than simply lettting the rate go back to 39.6% just to be able to pretend that rates haven't gone up for this group-baiscally to make their deal look better from their view point, although, it was probably necessary to get more GOP support for passing it.
The irony is that my way or the highway doesn't work. The more they dig in their heels and insist on it, the less power the GOP has. They continue to marginalize themselves further. I mean for all these hard lines they really have very little to show for it. Gingrich was complaining the night before the House passed the fiscal cliff bill that the GOP should slap some amendments to it and send it back to the Senate to 'make the President accept that the GOP exists.'
Now you hear Boehner declaring that he won't work with the President one on one again. This ignores that he didn't work with him on the cliff deal-rather he tried to sandbag him with Plan B. This led the deal being written in the Senate and rammed through the House. This was the same way the debt ceiling deal of 2011 went through.
Speaking of Gingrich in 1995 his own shutdown of the government was also an epic fail. The more they refuse to negotiate, the more they get left out of future negotiations and are further marginalized. Yet like the hostage takers they are they still act like they hold all the cards. As Krugman would put it, "It's really very sad."
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