Skip to main content

I'm not happy with the proposed deal and I hope the Rs kill it, but I'm not freaking out.  Since the Rs want more, I think/hope the deal will die, but we'll see.  I do understand it could be worse and there are some good things in it (more revenue and unemployment extension).  But I do not like it.

For discussion purposes, here's Paul Krugman's take.  He basically has a wait-and-see attitude:

[T]his contains stuff that Obama can’t get just by letting us go over the cliff: more revenue than he could get just from tax-cut expiration, unemployment and infrastructure too. But it has a cost, those benefit cuts.


Those cuts are a very bad thing, although there will supposedly be some protection for low-income seniors. But the cuts are not nearly as bad as raising the Medicare age, for two reasons: the structure of the program remains intact, and unlike the Medicare age thing, they wouldn’t be totally devastating for hundreds of thousands of people, just somewhat painful for a much larger group. Oh, and raising the Medicare age would kill people; this benefit cut, not so much.


The point is that we shouldn’t be doing benefit cuts at all; but if benefit cuts are the price of a deal that is better than no deal, much better that they involve the CPI adjustment than the retirement age.

But is this rumored deal better than no deal? I’m on the edge. It’s not clear that going over the cliff would yield something better; on the other hand, those benefit cuts are really bad, and you hate to see a Democratic president lending his name to something like that. There is a case for refusing to make this deal, and hoping for a popular backlash against the GOP that transforms the whole debate; but there’s also an argument that this might not work.

I want to see more — and also want to see whether the Republican crazies scuttle the whole thing before it even gets off the ground. If they don’t, there will be some serious agonizing for progressives, yours truly included.

Paul Krugman

Since Boehner has rejected the deal, it can only get worse.  Let's hope this was the last, best offer from President Obama.  

Anyway, Krugman makes some interesting points that add to the discussion.

Update I: Thanks to David Mizner, here are Dr. Krugman's latest thoughts on the proposed deal:

Paul Krugman, The Deal Dilemma

First things first: cutting Social Security benefits is a cruel, stupid policy — just not nearly as cruel and stupid as raising the Medicare eligibility age.


The question about this looming deal is whether the end justifies the means. Unfortunately, it’s not nearly as clear a case as the health care deal, and I’m agonizing, big time; as of last night I was marginally positive, right now marginally negative.


As I understand it — the reporting is weirdly silent on this, but it’s what I got from my own conversation with an SAO* — is that taxes on unearned income are going back to pre-Bush levels: capital gains at 20 instead of 15 percent, dividends taxed as ordinary income. If I’m wrong about that, this is easy: no deal.

And there’s extra revenue too, notably from changing the treatment of itemized deductions: instead of being a deduction from taxable income, they offer a tax credit, not to exceed 28 percent — which means a further substantial tax rise for people in the top bracket. Overall, there’s more revenue in this deal than you get from letting the high-end tax cuts expire after the cliff.

So the revenue side isn’t that bad; we do make some headway on unstarving the beast.


Also on the plus side, extended unemployment benefits and more infrastructure spending. But no payroll tax cut extension, which means a fairly big dose of austerity despite the deal.

But then there’s the Social Security cut.


What it does mean is that after retirement your payments grow more slowly, about 0.3 percent each year. So if you retire at 65, your income at 75 would be 3 percent less under this proposal than under current law; at 85 it would be 6 percent less; there’s supposedly a bump-up in benefits for people who make it that far.

This is not good; there’s no good policy reason to be doing this, because the savings won’t have any significant impact on the underlying budget issues. And for many older people it would hurt. Also, the symbolism of a Democratic president cutting Social Security is pretty awful.


So is what Obama gets out of this — basically unemployment benefits and infrastructure — worth it? The hardship of the unemployed is important; on the other hand, the numbers here are only about half a percent of GDP.


One thing is for sure: any further concession on Obama’s part would make this a total non-starter. And I’m waiting for clarification on capital gains and dividends. But even as it stands, it’s not a deal to be happy about.

So am I dead set against? No, I’m still agonizing. Very uncomfortable times.

Please read the entire analysis.

Your Email has been sent.
You must add at least one tag to this diary before publishing it.

Add keywords that describe this diary. Separate multiple keywords with commas.
Tagging tips - Search For Tags - Browse For Tags


More Tagging tips:

A tag is a way to search for this diary. If someone is searching for "Barack Obama," is this a diary they'd be trying to find?

Use a person's full name, without any title. Senator Obama may become President Obama, and Michelle Obama might run for office.

If your diary covers an election or elected official, use election tags, which are generally the state abbreviation followed by the office. CA-01 is the first district House seat. CA-Sen covers both senate races. NY-GOV covers the New York governor's race.

Tags do not compound: that is, "education reform" is a completely different tag from "education". A tag like "reform" alone is probably not meaningful.

Consider if one or more of these tags fits your diary: Civil Rights, Community, Congress, Culture, Economy, Education, Elections, Energy, Environment, Health Care, International, Labor, Law, Media, Meta, National Security, Science, Transportation, or White House. If your diary is specific to a state, consider adding the state (California, Texas, etc). Keep in mind, though, that there are many wonderful and important diaries that don't fit in any of these tags. Don't worry if yours doesn't.

You can add a private note to this diary when hotlisting it:
Are you sure you want to remove this diary from your hotlist?
Are you sure you want to remove your recommendation? You can only recommend a diary once, so you will not be able to re-recommend it afterwards.
Rescue this diary, and add a note:
Are you sure you want to remove this diary from Rescue?
Choose where to republish this diary. The diary will be added to the queue for that group. Publish it from the queue to make it appear.

You must be a member of a group to use this feature.

Add a quick update to your diary without changing the diary itself:
Are you sure you want to remove this diary?
(The diary will be removed from the site and returned to your drafts for further editing.)
(The diary will be removed.)
Are you sure you want to save these changes to the published diary?

Comment Preferences

skybluewater, schemp, bink, GainesT1958, paradox, tsackton, democrattotheend, DeminNewJ, chrississippi, dwellscho, LeislerNYC, AaronInSanDiego, glitterscale, Rolfyboy6, madmsf, PeterHug, Shockwave, just another vet, Wintermute, CleverNickName, raygunnot, willyr, ltsply2, MarkInSanFran, expatjourno, dweb8231, goObama, opinionated, missLotus, TracieLynn, Einsteinia, kalihikane, magnetics, whenwego, SlowNomad, Glic, boilerman10, mrblifil, Aquarius40, roses, Fe, Iberian, splashy, wader, revsue, menodoc, psnyder, ranger995, Lawrence, kj in missouri, chrismorgan, flatford39, Catte Nappe, chickeee, grrr, riverlover, Brian82, zerelda, ybruti, tomjones, American in Kathmandu, jhawklefty, sb, Dirk McQuigley, maybeeso in michigan, radarlady, UncleCharlie, blueyedace2, yuriwho, irate, Flint, JohnB47, kefauver, ChemBob, YucatanMan, EJP in Maine, Dobber, Laurence Lewis, bleeding blue, Inland, GreyHawk, Ice Blue, PinHole, Tool, Savvy813, LivesInAShoe, peacestpete, Jim R, begone, Dolphin99, esquimaux, BachFan, MeMeMeMeMe, Themistoclea, HoundDog, rl en france, cookseytalbott, Lefty Coaster, blueoasis, DarkestHour, bubbanomics, real world chick, reachjeff, doingbusinessas, blueoregon, nannyboz, Hedwig, Aaa T Tudeattack, cpresley, bear83, fisheye, out of left field, Habitat Vic, Cat Whisperer, verso2, offgrid, puakev, DvCM, LillithMc, Mary Mike, david mizner, 310helix, Matt Z, terabytes, deepeco, sfbob, Seneca Doane, artisan, HCKAD, bobswern, OIL GUY, pioneer111, Rumarhazzit, W T F, MKinTN, also mom of 5, wayoutinthestix, Youffraita, Senor Unoball, prettyobvious, Aureas2, Involuntary Exile, bythesea, skohayes, Cat Servant, Laughing Vergil, filby, treesrock, jamess, rssrai, tofumagoo, pamelabrown, Jake Williams, mofembot, No Exit, Gemina13, petulans, sewaneepat, DixieDishrag, Al Fondy, Nica24, Quilldriver, fayea, 207wickedgood, bluebelle7, maggiejean, savano66, artmartin, McGahee220, nchristine, ewmorr, don mikulecky, fearisthemindkiller, ebrann, kat68, CamillesDad1, sfarkash, jfromga, winsock, deviant24x, Larsstephens, BlueOak, Railfan, Its the Supreme Court Stupid, Laurilei, FogCityJohn, flitedocnm, TFinSF, estreya, gramofsam1, Anima, Crabby Abbey, Lost and Found, CrissieP, renzo capetti, gulfgal98, samanthab, ItsSimpleSimon, Betty Pinson, ericlewis0, USHomeopath, Oh Mary Oh, wwjjd, fiercefilms, stevenaxelrod, Glass Navel, Actbriniel, mallyroyal, slice, Mac in Maine, DB55, Onomastic, sabo33, sostos, jardin32, La Gitane, Bluerall, BillyElliott, smiley7, Jed Lewison, molunkusmol, marleycat, PorridgeGun, Empty Vessel, enhydra lutris, VTCC73, LaurenMonica, dawnspantry, Mentatmark, Jerry056, worldforallpeopleorg, anodnhajo, sow hat, TheLizardKing, greenbastard, IndieGuy, Jakkalbessie, foucaultspendulum, wordfiddler, Bensonola, Eric Nelson, peachcreek, hotheadCA, Arahahex, MartyM, doroma, wasatch, Robynhood too, WheninRome, nomandates, jbob, poopdogcomedy, aresea, alice kleeman, leeleedee, Icicle68, rigcath, chicklet, MBishop1, ConfusedSkyes, OregonWetDog, RUNDOWN, CA wildwoman

Subscribe or Donate to support Daily Kos.

Click here for the mobile view of the site