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Right Turn
Posted at 09:07 PM ET, 07/22/2011

How the White House killed the deal

In an aggressive move, the House speaker’s office has put out a blow-by-blow on how the debt talks collapsed:

The White House is misleading reporters tonight by claiming that new revenue in the framework that was discussed would have been generated by letting the current tax rates expire. That is simply false. Under the framework, a CEILING was offered by the White House that would generate $800 billion in new revenue over ten years. This would be done through comprehensive tax reform that would clear out deductions, credits, and loopholes in the system – and spur economic growth.
After the gang of six plan came out, the White House moved the goal posts and insisted on $400 billion more in higher taxes – a 50% increase in revenue – and wanted that to be the FLOOR instead of the ceiling. The President acknowledged this in his remarks tonight. “Letting tax cuts expire” was never part of the tax reform agreed to. Please let me know if you have any questions. – steel
Summary of the White House ‘walk backs’ during discussions of the ‘framework.’:
TAXES
•The White House agreed to a revenue total that would set a ceiling of about $800 billion in new revenue over ten years that could be generated through economic growth and efficiencies in our tax system (not tax hikes).
•After the ‘Gang of Six’ plan was released, and in the wake the reaction from Hill Democrats, they moved the goal posts and insisted on $400 billion more in higher taxes – a 50% increase – and wanted that to the floor instead of the ceiling.
•At the same time, they struck principles of tax reform that were already agreed to, including a protection against tax hikes on small businesses and a guarantee that there were would be only 3 tax rates and highest one would be below 35%
SOCIAL SECURITY
•There was an agreement to change the way government calculates inflation that would significantly extend Social Security’s solvency
•The White House moved off of a previously agreed to solvency target, suggesting a weaker level with 25% less in savings

A Republican source with knowledge of the talks tells me, “Medicaid was unresolved. We wanted higher savings number ($200B over 10 years) and they weren’t moving much (only at $125B) despite the fact that Obama told Boehner his offer to essentially split the difference on the numbers gap was very fair.”

As for Medicare I am told the two sides were actually “very close.” Obama had offered, according to a knowledgable source, to increase the Medicare eligibility age, adjust premiums collected for services and benefits currently covered by Part B and Part D, reform and streamline deductibles and co-insurance for covered services and limit certain types of supplemental insurance coverage. All of this sounds very similar to a plan introduced by Sen. Joe Lieberman (I-Conn.). If this is correct, the Democrats will have a mighty hard time reviving the Mediscare gambit.

The fact that Boehner and others would release this information shows the degree to which the White House lost his trust. Only when one party feels jerked around and set up to fail does this sort of thing occur. Is the president trying to bring about a default? It sure seems that way.

By  |  09:07 PM ET, 07/22/2011

Categories:  Budget

 
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