Ezra Klein: Wonkbook: A smarter deficit deal

[dkf]

Inside the White House, there's talk of cutting payroll taxes on the employer side. Outside of it, liberals are making noises about attaching further tax cuts or stimulus to a debt-ceiling deal. That makes sense, given that unemployment remains above 9 percent. What doesn't make sense is that these are small ideas and, in the case of attaching stimulus to the debt ceiling, probably doomed ones. And though that's bad for Democrats and bad for the jobless, it's also a missed opportunity for Republicans.

As I argue in my Bloomberg View column this morning, Republicans who want more long-term deficit reduction and more spending cuts should see stimulus not as the enemy, but as leverage. If the deficit reduction negotiation is only and solely about deficit reduction, Democrats will be primarily interested in making the cuts more gradual and the tax increases more significant. With stimulus as one of the items in the deal, however, Democrats could agree to more total deficit reduction, and perhaps even more of it in spending cuts, than they would otherwise. Stimulus, in other words, is a deliverable that Democrats care about much more than Republicans do, which makes it perfect leverage for Republicans to negotiate concessions on the items they care about more than the Democrats do.

The president's deficit-reduction framework envisioned a 3:1 compromise: $3 of spending cuts for every $1 of tax increases (though his math on the tax side was really quite misleading, albeit in the direction of overstating his tax increases, not in the direction of obscuring them). Imagine if Republicans countered with a 4:1:1 offer: They would accept $1 of tax-side stimulus between now and 2012 for every $4 of spending cuts and $1 of tax increases between 2013 and 2022. In theory, the incentives of that deal should please everyone: the more stimulus there is, the more deficit reduction there is. Revenues become as small a part of the final bargain as is realistic. And yet, as far as anyone can tell, nothing like this is the table.

http://www.washingtonpost.com/blogs/ezra-klein/post/wonkbook-a-smarter-deficit-deal/2011/06/09/AGDCQ7MH_blog.html

[DJ13]

1. A smarter deficit deal is NO deal

So the two sides reach a grand compromise (or should I say, Obama compromises), then what?

What happens in 2012, 2013, 2014, 2015, 2016?

Every year will be another opportunity for the far right to hold the country hostage if they get away with it this time.

Screw that, let them scream, either they give in eventually or they will forever be blamed as the party that damaged our country.