The papers this morning are filled with gloomy assessments of the fiscal talks — see the Post’s overview — with predictions mounting that we are going to go over the cliff. A lot of noise has been kicked up by all the finger-pointing, so let me summarize the situation in two sentences:
1) Democrats are willing to agree to hundreds of billions of dollars in Medicare cuts.
2) Republicans are not willing to agree to one penny in higher tax rates from the wealthy.
Does this mean that Dems shouldn’t be expected to make more concessions than they already have? No, it doesn’t. Obama has already proposed a budget that contains around $340 billion in Medicare cuts, but as Politico reports in its overview of the talks this morning, Dems are likely going to have to put more on the table to secure a deal. The left has drawn a sharp line against any cuts that result in higher costs for beneficiaries, as opposed to targeting providers, and I hope that the final deal doesn’t hit middle or low income beneficiaries. But it does seem likely Dems will ultimately decide they have to agree to some concessions the base won’t like.
There is no equivalence between the Democratic and Republican sides, however. The GOP has not given an inch when it comes to the core question of whether tax rates on the rich will go up. Yes, Republicans have agreed to new revenues from the wealthy via closing loopholes and deductions. But many experts believe the math simply can’t be made to work without a rise in high end rates, and this was perhaps the central issue in the election that Obama just won decisively. The contrast is simple: Dems have given ground on the need for Medicare cuts — even if you think they haven’t given enough ground, they have given some ground. But Republicans have not given any ground on the central concession they will have to make for a deal to be possible.
That still remains the main obstacle here, and any account that doesn’t make that crystal clear is simply misleading people. That’s why Politico reports that the writing is on the wall — Republicans will end up agreeing to higher rates on the rich:
There is no chance taxes are not going up for people making north of $250,000 — and virtually no chance that doesn’t include their tax rates, too. Republicans publicly say they are opposed to rate hikes — but privately they know they are going up, if not all the way to the Clinton-era 39.6 percent, then darn close.
UPDATE: I should also add that on top of the Medicare cuts they’re willing to accept, Democrats already voted into law over $1 trillion in spending cuts during Obama’s first term. By contrast, Republicans have yet to make a single concession on tax rates.
And: Politico reports that Dems are also likely to agree to more massive spending cuts on top of Medicare cuts.
* Another GOPer admits Dems have the leverage on taxes: Rep. Lee Terry of Nebraska tells the Ohama World Herald that the fact that taxes will go up automatically on January 1st gives Dems the upper hand:
“We’re screwed either way. We really have no leverage in these discussions.”
This comes after GOP Rep. Tom Cole said pretty much the same.
* How Boehner will sell tax hikes to Tea Party: The remaining problem is how to sell tax hikes — which will likely total at least $1.2 trillion — to the Republican base. Politico again:
House Republicans, already worried about possible primary challenges in 2014, are pleading to keep that number below $1 trillion.
Apparently this will be how Boehner will claim “victory.” After all, that would be far closer to Boehner’s opening bid ($800 billion in revenues) than to Obama’s ($1.6 trillion).
* Dems to agree to big Medicare cuts? Politico also predicts Dems will end up agreeing to at least $400 billion in Medicare cuts — almost certainly more than the Dem base and labor can stomach. The question will be who they target. Obama’s proposed cuts would mainly hit drugmakers, providers, and high income beneficiaries.
The New York Times editorializes today that there is no reason for the final deal to hit low income beneficiaries with higher costs. The Post has also noted that Medicare can be cut in a progressive way.
* What will Mitt Romney do? Obama and his defeated opponent are set to have lunch today. One key thing to look for will be whether Romney — who no longer has to keep the GOP base happy — makes some kind of public statement urging more cooperation from Republicans in the fiscal talks.
* Progressives increasingly confident Obama won’t cave: TPM’s Benjy Sarlin reports that liberal groups and labor are growing more and more certain that Obama has no intention of giving ground on tax rates for the rich. What’s particularly notable is that liberals are cautiously optimistic that the White House might even be willing to go over the cliff if necessary rather than give on this core priority.
* Facts are clear in Susan Rice/Benghazi “scandal”: A must read from Scott Shane, who explains that there is actually a set of facts that have been established about UN Ambassador Susan Rice and the Benghazi talking points she accurately recited after the attacks: They were prepared and changed by the CIA. Tell that to John McCain:
The criticism has barely been affected by the revelation that she accurately recited the talking points the intelligence agencies prepared.
It’s still unclear why Rice is the target here.
* Are Dems set to fight for Rice? MSNBC quotes anonymous Senate aides saying Dem Senators are expecting Obama to nominate Rice for Secretary of State. I don’t know if this is true, but one effect the GOP attacks have had is that the Dem base is really spoiling for this fight.
* More good economic news: It turns out the economy grew at 2.7 percent in the July-September quarter, more than previously thought. This may help explain why Obama won reelection more decisively than many expected, and gives us grounds for cautious optimism.
* And a bit more on Bruce Bartlett and Fox News: Yesterday I quoted Bruce Bartlett’s publicist vouching for his claim that Fox had refused to have him on the air to discuss his book that was highly critical of George W. Bush. Now David Frum, who has had his own run-ins with movement conservatism, vouches for Bartlett’s publicist as one of the best in the business.