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Wonkbook: Boehner's debt-limit demands would increase the deficit

By Ezra Klein,


John Boehner's new line on the deficit negotiations is that raising taxes -- by which he appears to also mean closing tax expenditures -- "is off the table. But everything else is on the table." This is a bit like telling your doctor, who's worried that you've gained weight and are out-of-shape, that exercise is off the table, but everything else is on the table. Well, it's nice that you're prepared to diet, but you need to exercise, too. Otherwise, you're not going to get where you need to go.

And without revenue, we're not going to get where we need to go -- at least if you think where we need to go is towards a balanced budget. Over the past 10 years, the Bush tax cuts have increased the deficit by about $1.3 trillion. They're the single largest policy contributor to our recent deficits. Due to the growth of the economy and the creep of the alternative minimum tax, they'll cost the Treasury closer to $4 trillion over the next 10 years. They're the single largest policy contributor to our projected deficits.

Extending the Bush tax cuts over the next 10 years, which Boehner favors, will increase the deficit by twice as much as the $2 trillion in spending cuts he's calling for will reduce the deficit. Conversely, adding the revenue increases in the Simpson-Bowles plan to his spending cuts would bring the deficit reduction to more $3 trillion. But Boehner isn't using the debt-ceiling vote to reduce the debt. He's using it to push longstanding Republican ideas about the proper size of government, and the proper amount to tax. This has been clear for awhile, of course, Remember CutGo? But it's worth being straightforward about it. Boehner's plan doesn't get our finances back in shape. He wants us to spend less, but he also wants us to cut taxes by more. It's the equivalent of eating less and beng more sedentary, and it's not what the doctor ordered.

Five in the morning

1) Obama renewed his immigration reform push at the border, reports Perry Bacon: "Standing within sight of Mexico, President Obama declared Tuesday that 'we have strengthened border security beyond what many believed was possible,' in his latest attempt to rally support for a proposal that would create a path to citizenship for undocumented immigrants. On his first trip to the U.S.-Mexico border as president, Obama attempted to blunt the conservative argument that the United States should secure its own borders before making any other changes to liberalize immigration law. Obama reeled off a series of statistics that he says prove U.S. borders are not plagued by illegal crossings and crimes, as many conservatives say...The president accused Republicans of constantly looking to 'move the goal posts' on what constitutes securing the border."

Read the speech:

2) John Boehner says tax hikes are a no go, report Paul Kane, Lori Montgomery, and William Branigin: "House Speaker John A. Boehner (R-Ohio) declared Tuesday that raising taxes is "off the table" in negotiations on deficit reduction, prompting a White House complaint that such "maximalist positions" do not lead to compromise. The White House also denounced Boehner's demand a day earlier for more than $2 trillion in spending cuts in exchange for Republican agreement to raise the U.S. debt limit...In an interview on NBC's 'Today' show ahead of a new round of deficit-reduction talks hosted by Vice President Biden, Boehner appeared to rule out any compromise with Democrats on allowing the Bush-era tax cuts for wealthy Americans to expire or ending tax breaks worth billions of dollars to large oil companies making record profits. Republicans define both steps as tax increases."

3) Senate Democrats want $21 billion from oil companies, report Philip Rucker and Lori Montgomery: "Senate Democrats unveiled a plan Tuesday to save $21 billion over the next decade by eliminating tax breaks for the nation's five biggest oil companies, a move designed to counter Republican demands to control the soaring national debt without new taxes. With the proposal, Democrats sought to reframe the debate over debt reduction to include fresh revenue as well as sharp cuts in spending. For the first time, Democratic leaders suggested an equal split between spending cuts and new taxes -- '50-50,' said Senate Majority Leader Harry M. Reid (Nev.). That represents a larger share for taxes than has been proposed by either President Obama or the bipartisan commission he appointed to recommend how to cut the national debt."

4) The US and China have reached a deal on currency, report Howard Schneider and Mary Beth Sheridan: "The United States and China on Tuesday pledged to deepen their cooperation on economic and military matters, setting aside a year of tension over issues such as arms sales to Taiwan and the value of China's currency with what officials referred to as a 'milestone' agreement... Treasury Secretary Timothy F. Geithner and Chinese Vice Premier Wang Qishan released what they described as a blueprint for managing the sometimes contentious economic relations between the two countries...The agreement included action on some long-standing issues -- including initial moves by China toward opening its financial sector by allowing U.S. and other foreign firms to sell auto insurance, sell mutual funds and other investments, and underwrite corporate bonds."

5) The White House and Congressional Dems are uniting against a spending cap, report Janet Hook and Carol Lee: "The White House and Senate Democratic leaders, worried that a proposal to cap federal spending could gain traction in Congress, have mounted a drive to discredit the idea. The proposal would limit federal spending--for everything from Medicare and other entitlements to discretionary items like military, education and foreign aid programs--to 20.6% of the nation's gross domestic product, when the cap is fully phased in. If Congress did not comply, the cap would be enforced with across-the-board spending cuts. Spending in the current fiscal year ending Sept. 30 is projected to be 24.3% of GDP, the highest since World War II, according to the Congressional Budget Office...Two Democratic senators have signed on, and party leaders worry that more could join."

Swedish pop interlude: Robyn plays "Be Mine!" live.

Got tips, additions, or comments? E-mail me.

Still to come: Biden's debt talks are stalling; appellate judges look likely to affirm health care reform's constitutionality; we need to poach the super-immigrants; Ruth Marcus was not impressed by Boehner's Wall Street speech; Senate Dems are reintroducing the DREAM Act; the House voted down a series of Democratic drilling proposals; and a seal celebrates being back in the ocean.


Biden's debt talks aren't going anywhere fast, report Jonathan Allen and Meredith Shiner: "The deficit-reduction task force, led by Vice President Joe Biden and populated by a mix of about a dozen administration officials and Republican and Democratic House and Senate members, met for a second time Tuesday amid great fanfare and low expectations. The result: not much...Despite perfunctory proclamations of 'progress' — Washington code for lots of talk and little action — the players appear no closer to a deal than they were after their first meeting last week. Democrats and Republicans involved in the process say it’s not clear what the president’s endgame is, much less the optimal outcome for each of the individual congressional players.

We should be poaching more entrepreneurs from other countries, writes Annie Lowrey: "The low-hanging fruit of immigration is not simply an open-door policy, but rather letting in--or, really, rolling out the red carpet for--highly skilled and educated workers and entrepreneurs. Back in 1999, Berkeley scholar AnnaLee Saxenian published one of the first comprehensive studies of the economic contributions of highly skilled immigrants, such as computer programmers, in California. Her paper found that foreign-born entrepreneurs were at the helm of a full quarter of Silicon Valley start-ups founded between 1980 and 1998--start-ups like, say, Google. In 1998 alone, those companies created $17 billion in sales and accounted for 58,000 jobs...Despite these success stories, the United States still discourages foreign-born entrepreneurs."

House Republicans want the SEC to ease capital-raising rules, reports David Hilzenrath: "House Republicans pumped up the pressure Tuesday on the Securities and Exchange Commission to ease restrictions on companies seeking to raise money from investors. But Democratic lawmakers urged the SEC not to abandon rules meant to protect potential shareholders from financial fraud. SEC Chairman Mary L. Schapiro charted a middle course through the political crossfire, promising to reconsider long-standing regulations that Republicans call unduly burdensome but rejecting some of their arguments about the need for change...Currently, when companies amass 500 or more shareholders of record, they are required to register with the SEC and make an array of disclosures, including how much money they are making or losing and how much they pay their top executives."

Renting and buying make about equal sense right now, writes David Leonhardt: "As this year’s spring buying season nears its peak, the relative merits of renting and buying are closer than they have been since the housing bubble began inflating almost a decade ago. So the best single piece of advice for most people is to make a decision based mainly on their stage of life, rather than on any complex financial calculations. If you think you are ready to settle in one place for at least five years, if not more, buying often makes a lot of sense. That’s why I bought my first house, in the Washington area, a few years ago, despite thinking local prices remained high. But if the chances are good that you will move again in the next few years, renting is usually the better bet. The various closing costs, including real estate agents’ fees, are just too high."

John Boehner needs to get real on the deficit, writes Ruth Marcus: "The news out of House Speaker John Boehner’s speech to the New York Economic Club was his demand for 'cuts of trillions, not just billions' before the debt ceiling can be raised. Not just broad deficit-reduction targets, the Ohio Republican insisted, but 'actual cuts and program reforms.' That’s alarming enough. It is all but impossible to get this done in the available time. It certainly can’t be accomplished on Boehner’s unbending, no-new-taxes terms. And if the speaker truly believes that it would be “more irresponsible' to raise the debt ceiling without instituting deficit-reduction measures than not to raise it at all, we’re in a heap of trouble."

Congress could learn from Mark Warner's governorship, writes Stan Collender: "Warner once told me that he was able to make budget changes in the state because Virginians saw his efforts as serious attempts to make the government less costly. Some changes, such as greatly reducing hours at the Department of Motor Vehicles and requiring that many transactions be conducted online, got big headlines when they forced people to deal differently with the DMV. But voters respected the cuts when it became clear that they could still do what they needed and that the reductions were having the desired effect on the state’s bottom line...The strategy that Warner used as governor -- put in place cost savings that change how government does its work, rather than what it does -- may be one of the best, and perhaps only, options available to Congress and the White House this year."

Adorable animals celebrating interlude: This seal is very happy to be back in the ocean.

Health Care

It looks like more judges will rule health care reform constitutional, reports Rosalind Helderman: "A panel of three federal appeals court judges aggressively questioned attorneys in a Virginia courtroom Tuesday who argued over the constitutionality of the federal health care overhaul -- appearing particularly skeptical of arguments that sought to invalidate the law. During a hearing that lasted more than two hours, the judges -- all appointed by Democratic presidents -- frequently interrupted lawyers on both sides to probe their legal positions. Both cases -- brought separately by Liberty University in Lynchburg and Virginia Attorney General Ken T. Cuccinelli II (R) -- argue that Congress exceeded its constitutional authority to regulate interstate commerce by requiring that individuals obtain health insurance by 2014 or pay a penalty."

John Boehner supports means-testing Medicare, reports Brian Beutler: "In a Q&A session with one of the event's moderators -- Wall Street billionare-turned-deficit-scold Pete Peterson -- Boehner said wealthy beneficiaries should pay for their Medicare premiums. 'Pete, I love you to death, but I don't think the taxpayers ought to be paying your Medicare premium,' Boehner said. 'And under Paul Ryan's plan, what it says is, let's allow the American people to decide which health care plan fits their needs. And if you're middle-income, lower income, we are going to pay, just like we do today, for the cost of those premiums. But for people of means, there's no reason why we should subsidize Pete Peterson's premium. I'm sorry. He ought to pay the full cost of his premium to be in Medicare.'"

And so does Steny Hoyer, reports Brian Beutler: "House Minority Whip Steny Hoyer (D-MD) offered cautious support Tuesday for the idea of adopting further means-testing of Medicare and Social Security to help shore up the finances of both programs. But the devil, he said, will be in the details. 'I don't want to get into means testing until we look at specific proposals,' Hoyer said at his weekly Capitol briefing in response to a question from TPM. 'Generally speaking, we do, as you know, have certain means testing in both Medicare and SS at this point in time...I think clearly we're going to have to make both of those programs sustainable over the long run, and I think to some degree it would be clearly appropriate to look at -- without endorsing any specific proposal -- the insuring that the least well off are protected and to do that look at the best terms of what level of support they get.'"

Henry Waxman is pushing back against both:

Paul Ryan's Medicaid proposal could hit seniors as much as his Medicare one, reports Jennifer Steinhauer: "While the largest number of Medicaid recipients are low-income children and adults, who tend to be far less politically potent voices in battles over entitlement programs than older voters, the changes to Medicaid proposed by Representative Paul D. Ryan of Wisconsin, the House budget chairman, could actually have a more direct impact on older Americans than the Medicare part of his plan. The House plan would turn Medicaid, which provides health coverage for the poor through a combination of federal and state money, into a block grant program for states...As a result, states...are likely to scale back coverage. Such a reduction, critics fear, could have a disproportionate effect on Medicaid spending for nursing home care for the elderly or disabled."

Sen. Bernie Sanders and Rep. Jim McDermott have introduced a single-payer bill:

Domestic Policy

Senate Dems will reintroduce the DREAM Act, reports Scott Wong: "Senate Democrats will re-introduce the long-stalled DREAM Act, hoping to tap into momentum from President Barack Obama’s speech along the border Tuesday about America’s need to pass comprehensive immigration reform. Senate Majority Leader Harry Reid (D-Nev.), Majority Whip Dick Durbin (D-Ill.), Sen. Bob Menendez (D-N.J.) and other Democrats will urge passage of the DREAM Act at a news conference Wednesday morning at the Capitol. Foundering in Congress for a decade, the legislation was passed in the House but came up five votes short of overcoming a Republican filibuster in the Senate during last December’s lame-duck session. The DREAM Act would provide a path to citizenship for millions of illegal immigrants brought to the country as children if they attend college or join the military for two years."

Immigration activists want more than legislative action, reports Carrie Budoff Brown: "Many top Hispanic activists say Obama’s commitment to a bill is welcomed, but too little, too late, and they’d rather he put just as much effort into actions he can do with the stroke of his pen -- such as slowing the deportations of certain illegal immigrants...Not only is Obama resisting requests to use his executive power, but there also is no evidence the administration has a legislative strategy to pass a bill through Congress. That has left many to question Obama’s motives: Is he really serious this time, or is he just checking a political box ahead of the 2012 election?"

Apple and Google were grilled at a Senate hearing, reports Julia Angwin: "Apple Inc. and Google Inc. defended the ways they gather information from mobile phones at a Senate hearing here Tuesday, but lawmakers said the companies may be encroaching on consumers' privacy. Sen. Al Franken (D., Minn.), chairman of the Senate Judiciary subcommittee that conducted the hearing, said he still had 'serious doubts' that cellphone users' privacy was being protected...The hearing came amid multiple efforts in Congress to curb the growing industry of gathering personal data about computer and smartphone users. At least five pieces of legislation have been introduced this year, including three that aim to create a mechanism that would allow users to turn off tracking."

Lego comedy interlude: Eddie Izzard explains the strategic importance of flags.


The House rejected a trio of Democratic drilling proposals, reports Peter Kasperowicz: "The House on Tuesday night rejected three Democratic amendments to a bill that would set firm deadlines by which the Department of the Interior would have to accept or reject Gulf of Mexico drilling permits. The first amendment to H.R. 1229, from Rep. Jared Polis (D-Colo.), would require safety reviews of all drilling permits to ensure they comply with all safety and environmental laws...The second, from Rep. John Garamendi (D-Calif.), would require the Department of the Interior to consult with an independent drilling safety organization not affiliated with the oil industry before granting a permit...The third, from Rep. Ed Markey (D-Mass.), would require the implementation of basic safety reforms recommended by the BP oil spill commission, including standards for blow-out preventers, cementing and well design."

The White House opposes a plan to merge Energy and the EPA, reports Robin Bravender: "The Obama administration 'unequivocally opposes' a Senate GOP bill to merge the EPA and Energy Department into one super-agency. The White House statement to POLITICO came in response to Sen. Richard Burr (R-N.C.), the bill’s sponsor, telling reporters that the administration found the proposal 'intriguing.' Burr said his bill had attracted the attention of officials in the White House and the EPA, who called his staff to discuss it. As for the EPA, he said, 'I think it’s a concern on their part.' He added, 'I think the White House found it intriguing.' But the administration’s definitely not interested, said White House spokesman Clark Stevens. 'The administration unequivocally opposes this bill,' Stevens said."

Closing credits: Wonkbook is compiled and produced with help from Dylan Matthews and Michelle Williams.

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