Upon Further Examination

While everyone is fixated on how terrible this debt-ceiling deal is for Democrats, If one pauses long enough to really analyze the details and all of their implications, one finds that, in the long term, this deal is actually wildly in favor of the President's position.

The truth is -- there actually is revenue included in this deal, and here I will briefly defer to Ezra Klein:

In a presentation to his members, Boehner says (pdf) that the rules governing the committee “effectively [make] it impossible for Joint Committee to increase taxes.” Specifically, he’s arguing that using the Congressional Budget Office’s “current-law baseline” makes tax increases impossible, as that baseline assumes the expiration of the Bush tax cuts, and so, if you touched taxes at all, you’d have to raise taxes by more than $3.6 trillion or the CBO would say you were cutting taxes and increasing the deficit.

Confused? That seems to be the point. Boehner is misleading his members to make them think taxes are impossible under this deal. But make no mistake: The Joint Committee could raise taxes in any number of ways. It could close loopholes and cap tax expenditures. It could impose a value-added tax, or even a tax on carbon. The Congressional Budget Office would score all of this as reducing the deficit under a current-law baseline. The only thing that wouldn’t reduce the deficit is going after part of the Bush tax cuts. That means they’re likely to go untouched in this deal.

In case you don't understand -- allow me to elaborate.

John Boehner is selling the current CBO baseline to his caucus to pass this bill, and the current baseline includes an expiration of the Bush Tax Cuts. The only way for the Bush Cuts to be extended is if the "super congress" committee offsets it with tax hikes or tax reform in other areas. Going after the Bush Tax Cuts in the committee would not count as reducing the deficit, because the baseline already assumes they will expire.

John Boehner knows this, but most members of his caucus and, admittedly, many members of the Democratic caucus don't realize it. I didn't put two and two together myself until late last night.

If you view this deal from the perspective that there is a guarantee the Bush Tax Cuts will expire, then suddenly the deal swings wildly in favor of President Obama.

The president offered John Boehner a 4:1, cuts:revenue deal, but what he ended up getting instead is a 1:2, cuts:revenue deal.

The Bush Tax Cuts account for roughly $3.7 trillion dollars in additional revenue over 10 years. The spending-cuts tentatively agreed to in the deal account for only $2.7 trillion dollars over 10 years. This means there is $1 trillion more dollars in revenue contained inside the deal over 10 years than there are spending cuts.

Furthermore, the spending cuts contained inside the bill do not come into effect until 2013, after the Bush Tax Cuts expire, meaning the revenue and cuts come into effect at roughly the same time.

If the rabid members of John Boehner's caucus realized this, they would probably be calling for his head.

It's no coincidence that President Obama came out last night and bluntly said this is not the deal he wanted. It's no coincidence that John Boehner and Eric Cantor both told their caucus that President Obama "caved." They have to say this, because if it appears that President Obama got anything in the deal, then suddenly it can't pass the House of Representatives. There is nothing they hate more than giving the president a victory, so it has to appear as if he got nothing, and they have been pretty convincing.

President Obama knew this would look bad for his administration in the short term, but he took that risk in exchange for winning further along down the road. As I mentioned above, none of this policy actually comes into effect until 2013. Not even the spending cuts. Only 1% of the spending cuts will be felt in 2012.

This deal masterfully accomplishes the task of kicking the can down the road for the Republicans without actually appearing so unless you really dig deep into it, and it leaves most of the details up to the next session of Congress beginning in January of 2013.

We all owe the president a great deal of respect for being willing to take the political hit in the short term to save us in the long term.

Note: opinions expressed here are my own.

  • zentrails

    Obama snookered the idiot Repubs.

    I can’t figure out why people think Obama is not an extremely smart, astute politician and he’s fighting against people who are not in the same league as him.

    It’s like Nolan Ryan pitching against a high school baseball team.

  • pnllsprkf

    thank you so much for the time and effort you put in to help educate us

  • I already shared this on FB, and at last count had been re-shared 4 times, last I looked. :p This made my nigh…no, my MONTH. LOL!

  • Jaym Esch

    Thank science for wisdom, finally. So many short-thinking, surface level reactionaries doing their “I’m going to teach Dems a lesson by sitting out in ’12” temper tantrums, without awareness of the real outcome of the bill AND the fact giving Conservatives the election guarantees the death of millions, and the end of America before ’16.

    By all means, ignore this insight. Just don’t be surprised at the bloodletting in the streets in ’13 from those denied aid programs and health care, if you sit out the vote because you are not as smart and politically strategic as President Obama.

  • The Bush tax cuts are set to expire on 12/31/12. At that time, if Obama has lost the election and Congress passes an extension of the Bush tax cuts, he could veto the measure without fear of political reprisals.

    I am not saying he will, but he could and that would put him in a strong bargaining position to finally get his taxes on those making 250K or more.

    The point that renewing the Bush tax cuts will force revenue cuts to pay for them and those cuts will have to come equally from Defense and Domestic spending puts actual consideration of letting the Bush tax cuts expire on the table. It would just be easier for Congress to let them go than pay for them. As fighting wars and enacting prescription healthcare benefits without paying for them can no longer be done.

    The funny note in this is it forces Republicans to pay for their policies, like Democrats have been doing.

    In order to make letting the Bush tax cuts expire palatable and be able to claim some portion of tax victory, Congress may have to acquiesce and just let them expire on the wealthy which is what Obama wants.

    They can’t argue that they should only expire for the poor and middle class. Can they?

  • Mark Olmsted

    Haven’t we learned by now that the major stories are the one’s we don’t see coming, and they change everything? Millions are running out of longterm unemployment benefits, with no extension or renewal in sight, nor any prospect of a jobs program to put them back to work. I predict there will be unrest, and in order to provide them aid the President will rejigger this deal to extend the Bush tax cuts. Sadly, the aid that result might come in the form of soup kitchens and “Obamacamps” for the foreclosed formerly middle-class, offering the idea visuals of for Republican re-election commercials.
    Haven’t we learned from the past two years that the most pessimistic scenario is far more likely than the most optimistic one? I hope I’m wrong and you are right, but if I had to bet on it…

    • Guest

      I doubt your scenario, but new tactics are needed. The unemployed and anyone else harmed by this callous economy must now go TO congressional offices and STAY there until unemployment extensions are passed. Workers in WI, OH and other states have begun standing up for themselves along with reliable allies, and that has to become part of our means of creating change. Not occupation of offices – if you’re unemployed you sure don’t have bail money – but a daily mass presence during business hours until we are heard. We have been far too passive. The Tea Party showed the way – we need to reclaim our legitimate voices and put pressure on those who ignore the people. Hold legislators accountable for the mess they have made and stiffen the spines of those who did NOT make the mess but now have to clean it up.

  • Phew, that does make me feel better. Thank you!!!

  • exoevolution

    When I first saw President Obama speak as the Keynote Speaker at the 2004 Democratic Convention, I immediately told my wife, this man will be a great American President!

    What I saw, was a man channeling the voice of history, a man speaking with the passion and truth of another African-American that once spoke with such incredible elegance, with words that shattered the lies of bigotry and hatred. I saw in Obama, a man that was half white and half black, a man that could at last heal the deep divisions that America has had since its inception. Going back to when Jefferson wrote “that all men are created equal”, while millions of black human beings were considered property and women’s rights were only marginally better.

    Plantation Owners have ruled America since our birthday on July 4 1776. Today the Plantation Owners no longer exclusively live in antebellum mansions in the Confederate States. Today the new Plantation Owners live on Wall Street, in the Pentagon, in America’s Corporate Media, in the Corporate Insurance Industry, in the thousands of Lobbying Offices that like all the new Plantation Owners, control their domain through their “ownership” of We the People’s government. Corporate America & Corporate America’s Simon Legree Club for millionaires and billionaires rule America with an iron fist. Today the 21st century Plantation Owners have won America’s “second” Civil War, fought these last 30 years. Beginning with Reagan’s “morning in America”, Clinton’s “corporatist America”, Bush II and his “ownership America” and now we see America’s first African-American president sealing the corporate Plantation Owner victory with “no taxes for rich Americans, ever”. Obama has become the “negotiator-in-chief” for corporate America, like Lee signing surrender at Appomattox, but this time the Plantation Owners have defeated freedom and ushered in a new era, a new form of slavery, where the average citizen is owned lock, stock and barrel by corporate America, in this new America of, by and for the top 1%, the modern day Plantation Owners.

    The irony of ironies, an African-American president is the leader, when America’s second Civil War proved victorious for America’s Corporate Plantation Owners.

    Yes indeed, it is “mourning” in America!

  • MarshallLucky

    I really hope you’re correct. I honestly do. This latest hit…it’s too much now. We can’t take much more of this kind of thing. If Obama jiujitsu’s this into the faces of the Republicans, good, brilliant. The Bush Tax cuts are a yoke on the neck of America and talking about deficit reduction is completely absurd with them still in place.

    But there have been three crises like this now, three instances of Republican blackmail, and three ugly last-minute deals. I’ll believe it when I see it. Meanwhile, we’re still hurting.

  • Zen Diesel

    I was really having a hard time wrapping my head around this agreement. I read article after article trying to figure out the nonsense. Depending on the article read, either the president is a sell out or a genius. I have come to realize that the president is a big picture thinker. I think the main thing that he wanted was this debt ceiling increase to last until 2013. That takes a very important Republican bargaining chip off the table. Hopefully he will spend the rest of his first term, pushing a jobs agenda. Unfortunately the TeaHobbits in the HOR will not let any sensible legislation pass.

    • JMAshby

      We’re two months from another government shutdown scenario. That will most likely drag out through the holidays.

      The Republicans need it to drag out. They have no other agenda outside of stalling and obstructing.

      They need to milk everything they can before election is in full swing.

      • Zen Diesel

        I hoping that more Americans will wake and smell the stench that the Republicans are cooking. I have exhaustively fought and argued with my conservative friends to come back from bizarro world and at least look at that facts and do some real critical thinking. Case in point, my friend yesterday, blasted the same ole tired republican talking points about how Obama has tripled the deficit. As usual, I provided stats from the CBO debunking the talking point, and asked for some kind of proof to back up his jackassery statement. Of course as of this morning “chirp chirp chirp chirp”

  • andrewdski

    The problem with this is, of course, that we need neither tax increases nor spending cuts right now. Either would be bad for the economy, both are a disaster.

    So saying Obama was so clever to trick the Republicans into agreeing to tax increases misses the point. Tax increases are bad too. More to the point reducing the deficit by $2.7 trillion will do less harm to the economy than reducing it by $6.4 trillion. So why should I be happy that Obama found a way to get us the latter?

    Finally, of course, despite all the shouting here, it does remain to be seen whether the Bush tax cuts will actually expire. If the Republicans in the house pass a bill that restores them shortly before the election, are you telling me the Democrats in the Senate will dare to vote no? And if they don’t will Obama dare to veto it? Right before the election?

    • Guest

      Tax increases are NOT bad when they affect after-deduction adjusted gross income. That is NOT investment money but money that exists after investments are deducted (meaning we all subsidize those investments; so much for “free market”.) Personal luxury income is not stimulative. It goes for high-cost, one of a kind goods that employ a very limited number of people. When a CEO nets 600 times what each employee does, he or she does NOT buy 600 cars, 600 washers, 600 refrigerators, and what IS purchased tend to go out of communities and even the nation. That is why lower income supports are so crucial: they make purchases locally and keep small businesses alive. When they can buy US made goods, it’s good for the whole nation. The high-end tax cuts are subsidizing NON investment wealth, and they need to stop. Every entity, real and fictitious persons, need to pay for their incomes. If my stock dividend is given to me, I pay tax, then my babysitter is taxed, then her hairdresser is taxed, and her babysitter is taxed. Everyone pays their fair share including corporations. NO one subsidizes the average person when they are earning well. The fictitious person cannot be subsidized when making profits well. It is a cycle of responsibility capitalist to wages to consumption and profts to taxes to common well being. When we thought we could break part of this cycle, that’s when we started dying as a nation and a society.

  • Joey Corbett

    Obama got so much more. He got the GOP to eat the whole debt problem hook line and sinker. They own it. Bought and paid for. It is theirs to fix. If they don’t triggers pull the revenue from the defense budget. Unless the GOP want to raise taxes on the rich. Rich taxes or Defense budget

    • Eeeexcellent!

      ::rubs hands together like Monty Burns::

      ::twirls imaginary handlebar moustache::

  • YES. More and more people are FINALLY seeing the “devil” (or, angel if you are a Dem/Liberal LOL) in the details!!! President Obama KNEW this would look bad for him at first. But he KNEW it HAD to look bad at first in order to get the Repub votes needed. See this blog article:

  • The only way for the Bush Cuts to be extended is if the “super congress” committee offsets it with tax hikes or tax reform in other areas. Going after the Bush Tax Cuts in the committee would not count as reducing the deficit, because the baseline already assumes they will expire.

    As far as I can tell, nothing prevents Congress from extending the Bush Tax Cuts outside of the committee. Which is what Congress will probably do — after all, it’s what they did last time.

    Am I missing something?

    • Joey Corbett

      The Presidential Veto

  • Joey Corbett

    Obama’s plan was to trick the Republican­s into supporting his plan. Obama tricked the Democrats with the Super 6×6. Letting Democrats think he was selling out. When the Republican­s saw the Democrats were angered by Obama, Republican­s inherent greed took over and they jumped on board with Obama. He couldn’t let anyone in on it or it would have failed. The plan says cut spending. We all agree with that. Not to SS, Medicare, Unemployme­nt. Republican­s can also raise taxes as agreed by the 6 Democrats. If Republican don’t cut spending or raise taxes triggers automatica­lly hit the bloated Pentagon budget therefor he will have gotten the Republican­s to a) raise taxes on the rich. b)Cut spending in a manner agreed by the 6 Democrats.­c) not be able to filibuster or argue.
    GOP is now between a rock and a hard place. This was the single greatest bamboozle in the history of politics. Obama is brilliant. Checkmate.

  • incredulous72

    Mitch has already vowed to hold the debt ceiling hostage again in the future.

    He needs to be voted out NOW!

  • LynnVeraLynn

    nicely done Ashby 🙂

  • gobrooklyn

    This is kicking the can down the road and I absolutely knew that Cantor and Boehner were bullshitting. That this stuff is pushed to 2013 should make us motivated to getting a larger better majority in the Senate and to win back the House. My number 1 goal is to defang that smug and evil asswipe Mitch.

    • Guest

      Liberals and progressives have to vote for Dems. Even a lousy Dem is essential since party control of both houses is the only way to move out of this mess. The idea that you can NOT vote and “keep your integrity” is ridiculous – your decision by indecision screws your neighbors NOT the Dems. The GOP 2010 win was very broad and very shallow. Over 90% of young people who voted for Obama did not vote at ALL in 2010 letting this happen. Over and over progressives have snottily blown off voting for “the lesser of two evils” – so the GREATER of two evils has prevailed – 1972, 1980, 2010. It has never been to the good of society or those in need or working families or students. You are indeed correct – changing the House and keeping the Senate and increasing its strength are imperative.

      • RoughAcres

        yeah, with turnout around 40%, the “mandate” the (R) got actually becomes 20-25% of the voting population. Not exactly what you’d call a ‘majority,’ now, is it?

  • NoBigGovDuh

    Four Myths About the “Deal” — and Four Ways It Can Hurt You:

  • I have been saying this ALL DAY..Calm down libersl and read it like a Democrat. We did not have the votes people. We win either way. The President has found a low key way to force tax reform…Which was his position along. He has put the Healthcare Lobby and the Defense Lobby and Congress in one room with a budget. This is the most strategic piece of legislation I have ever seen. Take a look folks at the triggers…There will be so much infighting in Congress and we all know money talks. What defense contractor will not vote to keep their pet projects…Now, the only way this goes wrong is based on the appointments to the committee..But this was a good gamble and I see the potential in a WIN for Dems.

    • beulahmo

      “This is the most strategic piece of legislation I have ever seen.”

      Don’t you just love the built-in guarantee of Republican in-fighting between tea partiers, defense lobby Republicans, and Norquista anti-tax conservatives??

      Spite–sometimes it’s like a drug to me. >;-)

  • Great job. A voice of sanity.

  • WHY DO I FEEL LIKE I NEED TO READ THIS A GUH-GILLION MORE TIMES??? Oh, yeah. Because of all the pity-liquor I’ve already consumed this evening. WHAAAAAAH????

  • mrspeel2

    “If the rabid members of John Boehner’s caucus realized this, they would probably be calling for his head.” Then why didn’t you wait until AFTER THE VOTE, Bob?? Now if it doesn’t pass it just may be YOUR fault!

    • beulahmo

      Don’t worry. The dominant chorus from the professional left today is that this is a very bad deal for Democrats. Republicans will be satisfied with that. For them, this was all about optics. For Democrats, political optics are less important than governing and economic outcomes.

      It’ll be okay.

      • mrspeel2

        In the cold light of day I’m trying to see that things may have worked out okay, but I still have reservations.

        You know how pundits and bloggers get all upset about some businesses being “too big to fail”? Watching Congress – or the lack thereof – over the past couple of weeks (okay, over the last few years but especially the last couple of weeks), I’m afraid I’m beginning to think that our country is edging toward the same conundrum. Too big to fail but our politicians are too dumb to run the country!

        Oh, and my final thought: Republicans are NEVER satisfied with ANYTHING.

        • “…our country is edging toward the same conundrum. Too big to fail but our politicians are too dumb to run the country! ”

          I am SO with you on that. Worse: I fear that our electorate is too dumb to deserve self-governing. Even *smart* Americans can be either (1) intellectually incapable of grasping that politics and governing are distinct activities, and that the intersection of the two can NEVER allow for a great degree of certainty on outcomes (e.g., the certainty in statements like “It WOULD have passed if he’d have just pushed harder!” simply baffles me); or (2) emotionally incapable of putting aside their personal need for spite/resentment in order to rationally recognize and choose the best options.

          Here’s something I reflected on earlier today: In my opinion, we’ve muddled through the last 20 years because 2 of the last 3 presidents were *extraordinarily* intelligent men. EXTRAORDINARILY intelligent. But how many people like that are going to run for President of the United States and actually win? I seriously started to wonder if my husband and I ought to consider moving to Sweden before 2017. His job might well permit us to do that. (I was ashamed for that thought because it’s cowardly and selfish. Still…..)

  • Older_Wiser2

    Hopefully, all those reactionary ‘baggers types will be gone by 2013. They came very close to sedition.

    Get out the vote in 2012, people!

  • You’re completely wrong, and so are fantasists like Ezra and Jon Chait. The entirety of the Bush tax cuts are not getting fucking expired. For fuck’s sake, what does the President have to do to get that through your fucking heads? How many times does he have to talk about the top 2%? Because he does it every time he talks taxes.

    He’s not lying. He’s not playing tricks to get elected twice. He’s not raising fucking taxes on every American. He’s not. And your post here is absurd.

    • Exactly, and I do mean EXACTLY, what in Ashby’s post is wrong?

      Please cite appropriate references to back up your suppositions.

      • We need a cite now that the President has spent the last four years saying he would only raise taxes on the top 2% of income earners? $200k individual/$250k joint filers, that ringing any bells? You know…the position he’s had for four years? And tried to pass last December? Did I mention he’s been saying this for four years?

        You have no evidence that the entirety of the Bush tax cuts will be allowed to sunset. None. It is explicitly against the President’s stated position. Me? I tend to take him at his word on matters of fiscal policy. He’s been remarkably consistent thus far.

        Oh, and the revenue that comes with raising taxes on the top 2%? Less than a trillion over a decade. For a final ratio of…drumroll…about 3:1, revenues: taxes. Does that sound familiar? Sounds more like his April proposal, right? Sounds more like his Grand Bargain proposal, right? Hmm. Weird.

        But, no, you’re right. He’s probably been slyly lying this whole time about the Bush tax cuts to win elections. That fox. $4 trillion in revenues for no reason! 11-D chess! fap fap fap fap fap fap fap fap

        • beulahmo

          Well, wait. The legislation is written with an automatic sunset. If Congress doesn’t / can’t / won’t negotiate an explicit extension, the cuts — ALL of them — will automatically expire.

          What am I missing? How will they somehow not expire?

        • ABL

          no evidence aside from the fact that they automatically sunset, you mean?


          puff, puff, pass. you’re fuckin’ up the rotation.

        • JMAshby

          It isn’t pretty clear by now that what politicians say, and what actually happens, are rarely ever the same?

          The president is still a politician. A very good one.

        • FAIL, Stephen. Try again. Maybe remove your tin foil hat and then re-read the post.

    • beulahmo

      “…He’s not raising fucking taxes on every American. He’s not.”

      Huh? I understand that President Obama has previously stressed that he prefers expiration of Bush tax cuts on only the top 2%. But please explain how President Obama will control the political dynamics such that his preference will be the result? Apparently it’s obvious to you, but I need help seeing it.

      • rover27

        Of course he’s not going to let ALL the Bush tax cuts expire. Look what happened last year. I wish he would($4 trillion in revenues), but is he going to raise taxes on people making $30,000, $40,000, $50,000 a year in a crappy economy? No.

        There’s no way Congress will decouple to low and high end tax cuts. My guess, he let’s them continue again for 2 more years. Just like last time.

        How else does he not? He has to chose whether to raise taxes on the lower and middle income vs. letting them all continue. There’s no separation.

        • beulahmo

          But you’re not answering my question. I’m not disputing Obama’s political preferences. What I don’t understand is this: how will the political dynamics in Congress play out to produce this result?

          • Miranda

            Notice how you’ll get no response to that question from the person you asked. Tells you all you need to know really.

  • BJonthegrid

    sweet information!

  • ABL

    lovely. i saw you parsing through the bill on twitter last night and was so pleased you did. well done.


    • ABL……..LOVE that graphic!~ 🙂

      • ABL

        @extremeliberal designed it! isn’t it awesome?

        • It is. EL is awesome too. Ya gotta love a man with that much righteous passion!

  • GrafZeppelin127

    Randi Rhodes was all over this today. Listening to her almost always makes me feel better.

  • Ashby, you are the lithium for my soul. I was so pissed this morning I could barely think – not at the president but at the fact that the folks most responsible for this bill will most likely be the folks not voting for it. Thanks, JM, I can sleep tonight.

  • beulahmo

    Thanks, Jordan. Great work. I suppose one’s opinion of this deal depends on one’s expectations of possible results. Going into this, I *knew* we were going to have to take some hits, so I’m relieved and grateful that the results are better than I expected. For folks who believe that Democrats (or just Obama) could have somehow mustered more leverage against a party cowering in fear of its most fanatical, nihilistic fringe, it’s a dismal failure. It just seems so irrational to me.

  • Great post. Thanks, Ashby.