Wonkbook: Obama’s latest fiscal cliff offer

December 18, 2012

Welcome to Wonkbook, Ezra Klein and Evan Soltas's morning policy news primer. To subscribe by e-mail, click here. Send comments, criticism, or ideas to Wonkbook at Gmail dot com. To read more by Ezra and his team, go to Wonkblog.

Wonkbook's Number of the Day: 57. That's the percent of Americans who said they support stricter gun-control laws than the status quo, according to a new CBS poll conducted after the Newtown, Conn. shootings. The poll numbers, cited in a New York Times story by Dalia Susmann, are significantly higher than readings before the shooting. A Washington Post/ABC News poll suggested that much of the population views the shooting as a social problem, and not an isolated incident.

Wonkblog's Graph of the Day: Perhaps mass shootings aren’t becoming more common.

Today in Wonkbook: a fiscal cliff deal is almost, almost here; the Newtown, Conn., shooting and the gun-control policy debate; unemployment and the American economy; Washington in transition; and implementing the Affordable Care Act.

Top story: Obama's latest counteroffer

The latest offer: "Obama laid out a counteroffer that included significant concessions on taxes, reducing the amount of new revenue he is seeking to $1.2 trillion over the next decade and limiting the hike in tax rates to households earning more than $400,000 a year. Obama had previously sought $1.4 trillion in new revenue, with tax increases on income over $250,000. Obama also gave ground on a key Republican demand — applying a less-generous measure of inflation across the federal government. That change would save about $225 billion over the next decade, with more than half the savings coming from smaller cost-of-living increases for Social Security beneficiaries."

"In addition, Obama increased his overall offer on spending cuts and dropped his demand for extending the payroll tax holiday, which has benefited virtually every worker for the past two years. But he is still seeking $80 billion in new spending on infrastructure and unemployment benefits and an increase in the federal government’s borrowing limit large enough to avert any new fight over the issue for two years. Boehner has offered a one-year debt-limit increase, and the fresh stimulus spending remains a sticking point, according to senior Republican aides, who also complained that the overall deal remains too tilted toward new taxes." Paul Kane and Lori Montgomery in The Washington Post.

Boehner spokesman Michael Steel sez: "Any movement away from the unrealistic offers the President has made previously is a step in the right direction, but a proposal that includes $1.3 trillion in revenue for only $930 billion in spending cuts cannot be considered balanced. We hope to continue discussions with the President so we can reach an agreement that is truly balanced and begins to solve our spending problem."

Note: The White House is counting reduced interest payments as reduced spending, which is how it's traditionally done (Simson-Bowles, for instance, counted reduced interest payments as reduced spending). Boehner's office, at this juncture, is not.

A ‘fiscal cliff’ deal is near: Here are the details. "All at once, a “fiscal cliff” deal seems to be coming together. Speaker John Boehner’s latest offer doesn’t go quite far enough for the White House to agree, but it goes far enough that many think they can see the agreement taking shape. Boehner offered to let tax rates rise for income over $1 million. The White House wanted to let tax rates rise for income over $250,000. The compromise will likely be somewhere in between. More revenue will come from limiting deductions, likely using some variant of the White House’s oft-proposed, oft-rejected idea for limiting itemized deductions to 28 percent. The total revenue raised by the two policies will likely be a bit north of $1 trillion...On the spending side, the Democrats’ headline concession will be accepting chained-CPI, which is to say, accepting a cut to Social Security benefits. Beyond that, the negotiators will agree to targets for spending cuts. Expect the final number here, too, to be in the neighborhood of $1 trillion." Ezra Klein in The Washington Post.

@Reddy: The real test for fiscal cliff negotiations will be how the House GOP responds to Boehner in their Tuesday meeting.

Wonkblog explains: The fiscal cliff, in graphs and GIFs. The Justice League one is my favorite.

@JohnJHarwood: Top Senate Dem aide: since Boehner moved on tax-rates & negotiations quickened, "there's almost no chance we go over the cliff."

What Boehner's proposal means. "The dam has finally broken on higher tax rates...Boehner’s $1 million threshold would raise $463 billion over 10 years, compared to about $829 billion for the $250,000 threshold that Democrats are insisting upon, according to the Joint Committee on Taxation." Suzy Khimm in The Washington Post.

Debate: Glenn Hubbard vs. Robert Reich on deficits.

@petersuderman: Incentives in the fiscal cliff talks have always been to 1) make a deal but 2) not until the last minute.

Explainer: A summary of the history on budget deals.

PONNURU: Almost everyone is lying about tax reform. "As pleasing as it is to find a consensus in this polarized era, this one is mistaken. It would be either undesirable or politically impossible to reduce the largest loopholes in the code...The Bowles-Simpson model of tax reform -- broadening the base and lowering rates -- is the wrong one. Some tax breaks should be scaled back, to be sure. But the idea that the federal government can painlessly raise a lot of money from a base- broadening tax reform is a myth." Ramesh Ponnuru in Bloomberg.

@RyanLizza: Kind of seems like the big winner in the fiscal cliff deal could be George W. Bush.

WEST: The inevitable deal approaches. "A funny thing happened on the way to the fiscal cliff: Too many people forgot that elected leaders prefer to avoid injuring the public that votes for them and the businesses that bankroll their campaigns...Should Obama and Boehner fail to complete a deal, it will be because of miscalculation during the endgame, which is a risk in any negotiation; not because a fiscal cliff deal was actually a long shot." Sean West in Bloomberg.

@grossdm: Emerging fiscal cliff deal will Get good ink in part because so few journalists make more than 400k

WESSEL: How big deficits became the norm. "What happened? How did the U.S. spend more than $1 trillion above what it collected in revenue in each of the past four years, producing deficits relative to the size of the economy that the U.S. hadn't seen since World War II? Why is Washington once again struggling to bring the revenue and spending lines closer together? The federal budget is so big -- $3.5 trillion in spending last year, or nearly $10 billion every day -- and so complex that fiscal issues can be hard to grasp. But the size and trajectory of the federal budget can be boiled down to three basics: the economy, spending and taxes."David Wessel in The Wall Street Journal.

SUPER: Just jump off the fiscal cliff. "[E]ven those who understand this often misjudge the likely impact of these automatic program cuts, known as the sequester, and the tax changes. Indeed, a closer look at this much-feared budget buzz saw reveals it’s better for the country than any likely deal would be." David A. Super in The New York Times.

Wow interlude: This is a big photo of a big tree.

Gun control after Newtown, Conn.

No details from White House on gun control. "The White House offered few details Monday about President Obama’s plans for proposing new ways to curb gun violence, as he pledged in an emotional speech in Newtown, Conn., the night before. Asked by reporters about what steps Obama intends to take, press secretary Jay Carney repeatedly declined to offer direct answers during his daily briefing." David Nakamura in The Washington Post.

Obama asks Cabinet members for proposals to curb gun violence. "President Obama on Monday began the first serious push of his administration to attempt to reduce gun violence, directing Cabinet members to formulate a set of proposals that could include reinstating a ban on assault rifles. The effort will be led by Vice President Biden, according to two people outside the government who have spoken to senior administration officials since Friday." Scott Wilson and Philip Rucker in The Washington Post.

Public support for gun control waned over the last few years... "Throughout much of the 1990s and the last decade, a solid majority of Americans said they supported stricter gun control laws. But the percentage has dropped sharply in the last several years, according to polls by both the Pew Research Center and Gallup, and the country is now more evenly divided." Marjorie Connelly in The New York Times.

...But that might all be changing after Newtown. "A CBS News poll conducted in the aftermath of the shootings at Sandy Hook Elementary School in Newtown, Conn., finds a significant increase in the number of Americans supporting stricter gun control laws...Fifty-seven percent of respondents say they should be made more strict, up significantly from 39 percent in a CBS News poll in April. Three in 10 in the latest poll say laws should be kept as they are now (41 percent in April said they should be kept as they are), while 9 percent say they should be made less strict." Dalia Susmann in The New York Times.

Wonkblog explains: Everything you need to know about the assault weapons ban, in one post.

Do concealed-weapon laws result in less crime? "The actual evidence is much murkier -- and in dispute. Certainly, it appears such laws have not increased the crime rate, as opponents had feared, but it is equally a stretch to say such laws are a slam-dunk reason for why crimes have decreased. Even those sympathetic to [economist John] Lott’s research suggest that any decline in the crime rate from right-to-carry laws is more sporadic." Glenn Kessler in The Washington Post.

Debate: Is the gun lobby invincible?.

The power of the NRA. "Even when the N.R.A. is silent -- as its Web site and Twitter feed remained Monday, after the second-deadliest school shooting in United States history -- it wields one of the biggest sticks in politics: A $300 million budget, millions of members around the country and virtually unmatched ferocity in advancing its political and legislative interests. Over the years, the N.R.A. has deployed armies of lobbyists around the country to knock back efforts to regulate guns and expand owners’ ability to carry concealed weapons in schools, parks, bars and churches. It has formed close partnerships with gun makers and business organizations around the country, working to protect manufacturers from liability and introduce model bills in state legislatures." Nicholas Confessore, Michael Cooper, and Michael Luo in The New York Times.

The legal history of the Second Amendment. "[N]o amendment received less attention in the courts in the two centuries following the adoption of the Bill of Rights than the Second, except the Third (which dealt with billeting soldiers in private homes). It used to be known as the 'lost amendment,' because hardly anyone ever wrote about it...During the nineteen-eighties, [an] interpretation, which came to be known as the individual-rights argument, gained the attention of several distinguished law-school professors, including, most notably, Sanford Levinson." Jill Lepore in The New Yorker.

Explainer: The 6 most important people in the looming gun control debate.

Will Newtown change anything? "There are, of course, gun-control measures that make sense. For one, the so-called gun-show loophole should be closed. This is the rule that allows firearms to be sold at arena-sized shows, and even on the Internet, without federal background checks. About 40 percent of all guns sold legally in the U.S. pass through this loophole...Similarly, it is difficult for me to understand why a hunter, or someone defending his family from a home invasion, would need a magazine with a 30-round capacity." Jeffrey Goldberg in Bloomberg.

Sen. Machin wants to talk gun control... "Sen. Joe Manchin (D-W.V.), a conservative Democrat and National Rifle Association member, said Monday that after the shooting in Newtown, Conn., on Friday, it’s time to discuss new regulations on assault weapons." Rachel Weiner in The Washington Post.

...As does Sen. Warner "Sen. Mark Warner (D-Va.) has an A rating from the National Rifle Association -- and a new perspective on gun control since Friday’s mass shooting at a Connecticut elementary school."Laura Vozzella in The Washington Post.

Explainer: Where the Senate stands on guns, in one chart.

SUNSTEIN: Crazy ideas about the Second Amendment. "What is important to see is that in the very recent past, the U.S. has lived through a Second Amendment revolution, spurred by an intensely focused and well-funded social movement with both legal and political arms. More important still, the Supreme Court has proceeded cautiously, and it has pointedly refused to shut the door to all gun regulation." Cass R. Sunstein in Bloomberg.

GERSON: We are not helpless against gun violence. "When making public policy, we do not design a nation from scratch. There are perhaps 270 million guns in America and more than 11 million people who suffered from severe mental illness in the last year. Yet the violence produced at this intersection is relatively small. The mentally ill account for 3 percent to 5 percent of violent crimes. The toll of mass killings in the United States -- those involving four or more victims -- averages about 160 a year." Michael Gerson in The Washington Post.

GOLDBERG: The case for more guns, and more gun control. "gun-control efforts, while noble, would only have a modest impact on the rate of gun violence in America. Why? Because it’s too late. There are an estimated 280 million to 300 million guns in private hands in America...When even anti-gun activists believe that the debate over private gun ownership is closed; when it is too late to reduce the number of guns in private hands -- and since only the naive think that legislation will prevent more than a modest number of the criminally minded, and the mentally deranged, from acquiring a gun in a country absolutely inundated with weapons—could it be that an effective way to combat guns is with more guns?" Jeffrey Goldberg in The Atlantic.

NOCERA: The MADD approach to gun control. "[S]eeing how powerfully affected the country has been by this horrible slaughter of children and their teachers, I couldn’t help thinking about M.A.D.D. Its success came about because its founders tapped into a wellspring of anger that had been quietly building -- just like the current anger over the recent spate of mass killings. But it also came about because mothers could give a human face to the consequences of political inaction: their own children. How do you trump that?" Joe Nocera in The New York Times.

In memoriam interlude: Profiles of the victims of the Newtown, Conn. shooting.

Unemployment and the U.S. economy

Why the unemployment rate might soon stop falling. "Over the past year, the U.S. unemployment rate has fallen rapidly, from 8.7 percent last November to 7.7 percent today. But a new paper from the Federal Reserve Bank of San Francisco suggests that this decline could soon stall out. Why is that? Not because the U.S. economy is about to slow down. Rather, it’s because a number of discouraged workers who had previously dropped out of the labor force may soon start searching for jobs again." Brad Plumer in The Washington Post.

Read: The "economic letter" from the Federal Reserve Bank of San Francisco.

Study: We won’t meet the Fed’s unemployment target for three years. "[I]f the Fed stays the course, how long will it be until rates rise? Not for a very long time, say the Hamilton Project’s Michael Greenstone and Adam Loone...[I]f we maintain the 220,000 jobs-a-month average, we won’t get to 6.5 percent until the middle of 2015...Given current rates of job growth, this means the 6.5 percent target pretty much matches the Fed’s previous commitments to keep rates low until the middle of 2015." Dylan Matthews in The Washington Post.

Video interlude: One second, every day.

Washington in transition

Wonkbookmark: The Washington Post's new special coverage center on the political transition.

Obama’s picks for State Department and Pentagon could be announced Friday. "President Obama hopes to announce his new national security nominees Friday, but the date depends on the status of the 'fiscal cliff' negotiations, administration officials said." Karen DeYoung and Anne Gearan in The Washington Post.

Urban interlude: Paris, in 'Midnight in Paris'.

Implementing the Affordable Care Act

Obamacare: ‘It’s a massive, nine-month sprint.' "Officials in the states that received approval last week to run their own exchanges describe the effort as a huge undertaking, with much work still to be done...States must build Web sites that will tell consumers whether they are eligible for subsidized coverage and detail the cost of a plan’s premiums, based on factors such as age and smoking status. They must also create consumer support programs to work with Americans who might be purchasing insurance coverage for the first time." Sarah Kliff in The Washington Post.

The health-spending problem lives on. "In recent years, the annual increases in health-care spending have slowed nationally, and, to a lesser extent, in Medicare. One reason is the recession, a temporary factor. President Barack Obama's health law includes a number of projects aimed at slowing spending, such as giving health-care providers a financial incentive to work together to control costs. No one is sure whether these programs will work. At its core, the law was designed to expand insurance coverage, not control costs." Laura Meckler in The Wall Street Journal.

Music recommendations interlude: "All the Right Friends," R.E.M., 2001.

Et Cetera

Daniel K. Inouye, U.S. senator, dies at 88. Emma Brown in The Washington Post.

The odometer of a warming planet. Justin Gillis in The New York Times.

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

Wonkbook is produced with help from Michelle Williams.

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Sarah Kliff · December 17, 2012