House Majority Leader Eric Cantor (left) leading opposition to McConnell-Biden deal. House Speaker John Boehner supports it.
Democrats want higher taxes on the wealthy, an extension of unemployment benefits, some stimulus, and assorted other spending to continue stimulating a moribund economy.
Republicans pretend they want to eliminate the deficit, but their entire negotiations are about destroying entitlements and keeping taxes low on the richest.
House Speaker John Boehner couldn't even get his caucus to vote for his plan, so he left things up to the Senate. So Senate Minority Leader Mitch McConnell and Vice President Joe Biden worked out this deal:
Republicans got a reverting of pre-Bush tax rates on income above $400,000 per year ($450,000 for families), unlike the $250,000 Democrats wanted (and campaigned on in 2012, and won). Republicans also got an indexing of the estate tax, so it goes up every year at the rate of inflation (necessary for rich dead people, but not necessary for minimum wage earners, apparently).
Democrats got a one-year extension of unemployment benefits, the elimination of some tax deductions on those making over $250,000, the extension of some business tax breaks, like for wind energy. There was some other stuff, but those are the most ideologically contentious items. And if that was the end of things, it would be a decent compromise and everyone could go home feeling okay about it. Republicans protected more of their rich friends' money, and Democrats got to help more people.
Except that this isn't the end of the negotiations. In fact, we have to do this all over again in two months.
And the problem is that in two months, Republicans would hold all the cards—the debt ceiling will be hit. So Democrats would have two choices—surrender on Social Security, Medicare, Medicaid, and a host of other critical social programs, or Republicans force a default on the national debt with calamitous repercussions for our economy. And if you think Republicans aren't crazy enough to make that happen, then you really haven't been paying attention to what has become of the House GOP.
The ONLY leverage Democrats have in this fight is tax rates. And this deal takes those off the table. So how crazy is it that House Republicans appear hell bent on blowing up this deal?
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Obama's negotiating style leaves ... something to be desired, defiantly drawing lines in the sand, only to erase them days or even hours later. So Republicans keep pushing because they know the president will always be back with new concessions.
Example: Obama's opening offer asked for $1 trillion in new revenue. Boehner's counter-offer was $800 billion in new revenue. The final deal? $600 billion. That's some laughably incompetent negotiating there. And it's not just Obama. At one point, Senate Dems were adamant that they wouldn't approve a 90-day delay in sequestration cuts because it just "kicked the can down the road". The final deal? Sixty days.
Now it's not all bleak on that front—Obama has learned to take concessions off the table once Republicans fail to reciprocate. In the past, he'd keep adding to the pile of concessions until Boehner ended up with 95 percent of what he wanted. This time around, Obama would offer something up (e.g. chained CPI for Social Security), but remove that concession when Republicans failed to respond in kind. That's progress.
But the fact that he would even consider offering something like a Social Security benefits cut is disappointing, and without the tax rate issue as leverage, Obama will have little to pressure Republicans into making major concessions of their own.
So this is all fantastic for Republicans. They extract major concessions on the Bush tax rates, and in two months they get to go after government spending in a major way holding the nation's economy hostage, negotiating with a president who has zero history of standing up to this sort of economic terrorism. All of this just months after getting their asses kicked in the election.
But House Republicans are fucking idiotic. Seriously, they're the dumbest bunch of asshats in this nation's history, refusing to stomach even a two-month reprieve in their mission to annihilate the federal government. So, they're trying to kill this deal, bailing out Democrats from their own bad dealmaking and weakening their future hand.
And if they're successful in scuttling this deal, taxes go up for everyone and they take the full blame. Democrats get to propose the Obama tax cuts for the middle class, along with a one-year unemployment insurance extension and extension of those business-specific tax breaks, and dare Republicans to vote against tax cuts for almost everyone.
And in two months, when we have the mother-of-all battles over the debt ceiling, Democrats still have taxes and the automatic defense cuts as bargaining chips to protect what they can of our social net. We're still likely to get a shitty deal, but nowhere near as shitty as we'd get by surrendering away our leverage today.