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Politics : View from the Center and Left -- Ignore unavailable to you. Want to Upgrade?

To: JohnM who wrote (165756)	7/11/2011 7:58:19 AM
From: JohnM	Read Replies (2) \| Respond to of 541595

More good stuff from Ezra Klein. -------------------------------------------------- Posted at 07:15 AM ET, 07/11/2011 Wonkbook: Three reasons the debt deal collapsed By Ezra Klein Last week's sudden and inexplicable burst of debt-deal optimism is over. But don't ask why the $4 trillion deal collapsed. That's like asking why John Boehner didn't sprout wings and fly. Ask why anyone ever thought it'd take off in the first place. Nothing changed between Thursday, when the grand bargain was apparently alive, and Sunday, when the papers solemnly recorded its time of death. But the real tell was that nothing had changed between the week before last, when a $2 trillion deal was too tough for the negotiators, and last week, when a $4 trillion deal was suddenly posited as possible. So asking "what went wrong?" isn't so much about what we've learned in the last few days as it is about what we already knew, but perhaps did not want to admit. It does not matter if John Boehner is a reasonable man. The White House likes John Boehner. They feel -- or at least felt -- he's someone they can do business with. But they're learning that they're not actually doing business with Boehner. They're doing business with the Republican Party. And Boehner isn't the Republican Party. In fact, of the four major figures in the GOP leadership -- Mitch McConnell, Eric Cantor, and Jon Kyl -- Boehner is perhaps least representative of the modern Republican Party. The main reason people thought we might have a deal last week was because Boehner said he wanted one. The deal's collapse is, first and foremost, a reminder that what Boehner wants really doesn't matter. For Republicans, this isn't about deficits. It's about spending and taxes. If this were really about deficits, a win-win would be possible. Easy, even. Republicans want spending cuts, and those cut the deficit. Democrats want revenues, and those cut the deficit. See where I'm going with this? But where Democrats really are arguing over deficits -- note their willingness to give more in spending cuts if Republicans will give more in revenues -- Republicans want less deficit reduction because it'll mean Democrats have less leverage with which to demand tax increases. For a deal to be possible, something will need to change. We've reached an equilibrium where Republicans can't accept any revenues and Democrats can't accept a deal without any revenues. And I use the word "revenues" advisedly. There was a brief, shining moment when it seemed the deal would be changes to the tax code that did raise revenues but didn't increase rates and so Republicans wouldn't count as tax increases. But Cantor and others have made clear that they will oppose any net increase in revenues. So there's no deal until something breaks the equilibrium. Right now, the most likely candidates, in order, are public fury arising out of a government shutdown or a market panic arising out of near-default. I'll end on a more speculative note: Republicans might come to regret rejecting Boehner's deal. Few noticed that his framework for new revenues was comprehensive tax reform -- which would preempt the expiration of the Bush tax cuts. In other words, he was finishing the tax debate during the debt-ceiling debate, when Republicans have most of the leverage, rather than letting it drift linger into 2012, when the Bush tax cuts are set to expire and Democrats will have most of the leverage. If Republicans could've agreed with Democrats this year, taxes would have gone up by $1 trillion. If they can't agree with Democrats next year, they'll go up by $4 trillion. And Republicans had a better hand this year than they will next year. I expect they'll come to wish they'd played it. washingtonpost.com