Wonkbook: What we learned from the Senate Democrats’ budget

March 25, 2013

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(EPA/MICHAEL REYNOLDS)
(EPA/MICHAEL REYNOLDS)

Shortly before 5 a.m. on Saturday, Senate Democrats passed a budget for the first time in four years.

This fulfills a key demand of Republicans, who'd come to view the Senate Democrats' failure to pass a budget as one of the key impediments to a fiscal deal. Remember that forcing Senate Democrats to pass a budget was the deliverable that persuaded House Republicans to sign onto a three-month delay of the debt ceiling. They cared about the Senate's budget that much.

And now that they've got a budget? When Rep. Paul Ryan, the top Republican on the House Budget Committee, saw the document, he said, "Their budget never balances—ever. It simply takes more from hardworking families to spend more in Washington. It ignores the drivers of our debt. It continues the raid on Medicare. And it imperils the health and retirement security our seniors need."

When the budget passed, Sen. Jeff Sessions, the ranking Republican on the Senate Budget Committee, said, “The Democratic Caucus has produced a budget here that won’t work. It does not meet the challenge of our time."

So Senate Democrats have passed a budget, and here's what we've learned: Republicans and Democrats still don't agree on what to do with the budget. Shocking, I know.

If there was a surprise in the Senate Democrats' budget, it's that Harry Reid and Patty Murray got so many of their colleagues to sign onto a framework, however vague, that sits to the left of the deal President Obama is currently offering the Republicans.

A key thread of the past few years is that the White House has believed Senate Democrats have little spine on taxes. In fact, quite a bit of the White House's negotiating strategy has been driven by the worry that in a crisis situation, Senate Democrats would take a deal with very little revenue, undercutting the White House's leverage.

This was also part of why Republicans were so eager to see Senate Democrats produce a budget. One of the working theories was that conservative Senate Democrats couldn't possibly support the administration's approach, and the deep fissures in the party were being papered over by Reid's refusal to actually release a budget. If Senate Democrats had to release a budget, the uneasy consensus would crack, and the moderate rejection of Obama's radical priorities would be clear for all to see.

On Friday, however, Senate Democrats stood up and voted for almost a trillion dollars more in tax hikes -- and that's on top of the tax hikes in the fiscal cliff deal. That's about $375 billion more in tax increases than even Obama has been asking for lately. Republicans always said Senate Democrats needed to show the American people where they stand on the budget, and now, they have. To the GOP's disappointment, it's to the left of Obama, and far from them.

The budget also gave the Senate as a whole an opportunity to show where they stood on issues ranging from too-big-to-fail (against) to Obamacare's medical device tax (against) to the Keystone XL Pipeline (for). Suzy Khimm has the full list of amendments here.

Wonkbook's Numbers of the Day: 80 and 44. The first is the percentage of Americans between the age of 18 to 29, and the second of those older than 65, who support gay marriage. More below. 

Wonkblog's Graph of the Day: References to equality of sacrifice, as a share of all printed words in the Google Books database, by year.

Wonkbook's Top 5 Stories: 1) it's background checks or bust for gun control; 2) gay marriage cases enter oral argument tomorrow; 3) how the economy affects the budget; 4) is corporate tax reform a real second-term priority?; and 5) a brief update on Cyprus.

1) Top story: The Senate Democrats passed their budget

The Senate passed a budget. Yay! That says a lot about politics. "The Senate’s vote to pass a budget creates a chance for Washington to settle its endless budget wars through a regular negotiation between the two chambers of Congress. But legislators were downbeat on the prospects of the House and Senate reaching a compromise that would bind them both." Robin Harding in The Financial Times.

There was an insanely long list of amendments to consider for the Senate budget. "The Senate passed a budget for the first time in four years shortly before 5 a.m. on Saturday. Why was the night so long? Before the debate could end, senators spent hours wading through a long series of symbolic, non-binding votes on amendments to the budget, a.k.a. “vote-a-rama.”" Suzy Khimm in The Washington Post.

Here's why so many amendments were phrased in the form of a "deficit-neutral reserve fund." Short version — 'deficit-neutral reserve funds' are completely inconsequential amendments offered as a way to discuss budget-irrelevant topics without violating budget reconciliation rules around what you can and can’t include in a budget resolution. Dylan Matthews in The Washington Post.

As Obama signs sequestration cuts, his goals are at risk. "With his signature this week, President Obama will lock into place deep spending cuts that threaten to undermine his second-term economic vision just four months after he won reelection...Obama now finds himself enacting a broad domestic policy that he doesn’t support and that he believes will harm the country." Zachary A. Goldfarb in The Washington Post.

Explainer: Key economic events for the week aheadAmrita Jayakumar in The Washington Post

Music recommendations interlude: The Wooden Birds, "Two Matchsticks," 2011.

Top op-eds

THE FINANCIAL TIMES: We endorse a carbon tax in the U.S. "Taxes are always a regrettable necessity, but some are less regrettable than others. A tax that strengthens energy security and cuts pollution, while minimising the damage done to employment and investment, is one of the least regrettable of all. Yet a carbon tax, which has all those characteristics, is struggling to find support from the US administration or in Congress. It deserves much wider enthusiasm." The Financial Times Editorial Board.

KOHUT: The GOP, estranged from America. "In my decades of polling, I recall only one moment when a party had been driven as far from the center as the Republican Party has been today. The outsize influence of hard-line elements in the party base is doing to the GOP what supporters of Gene McCarthy and George McGovern did to the Democratic Party in the late 1960s and early 1970s — radicalizing its image and standing in the way of its revitalization." Andrew Kohut in The Washington Post.

KRUGMAN: Hot money blues. "It will mark the end of an era for Cyprus, which has in effect spent the past decade advertising itself as a place where wealthy individuals who want to avoid taxes and scrutiny can safely park their money, no questions asked. But it may also mark at least the beginning of the end for something much bigger: the era when unrestricted movement of capital was taken as a desirable norm around the world." Paul Krugman in The New York Times.

DOUTHAT: The Obama era, brought to you by the Iraq War. "When prominent people in Washington spend an anniversary apologizing for being catastrophically, unforgivably wrong about a decade-old decision, you might expect that the decision in question had delivered their party to disaster or defeat. But last week’s many Iraq war mea culpas were rich in irony: one by one, prominent liberals lined up to apologize for supporting a war that’s responsible for liberalism’s current political and cultural ascendance." Ross Douthat in The New York Times.

SCHEVE AND STASAVAGE: Is the estate tax doomed? "With income inequality at levels not seen since the 1920s, and low economic mobility, some liberals hope that in the coming years our lawmakers will face intense political pressures to maintain, and even raise, taxes on inherited wealth. In this view, economic realities are building a compelling case for a more progressive tax system. But judging from the experience of other wealthy countries, the opposite may be true. As inequality has risen in the developed world, many governments have been dismantling — not increasing — estate taxes. Countries from Austria to Canada to Sweden have abolished estate taxes outright" Kenneth F. Sheve Jr. and David Stasavage in The New York Times.

ROSENTHAL: Life after oil and gas. " To what extent will we really “need” fossil fuel in the years to come? To what extent is it a choice?...A National Research Council report released last week concluded that the United States could halve by 2030 the oil used in cars and trucks compared with 2005 levels by improving the efficiency of gasoline-powered vehicles and by relying more on cars that use alternative power sources, like electric batteries and biofuels." Elisabeth Rosenthal in The New York Times.

CONLY: The case for the nanny state. "In the old days we used to blame people for acting imprudently, and say that since their bad choices were their own fault, they deserved to suffer the consequences. Now we see that these errors aren’t a function of bad character, but of our shared cognitive inheritance. The proper reaction is not blame, but an impulse to help one another. That’s what the government is supposed to do, help us get where we want to go. It’s not always worth it to intervene, but sometimes, where the costs are small and the benefit is large, it is." Sarah Conly in The New York Times.

Artistic interlude: The best portraits, 2013 prizes

2) Supreme Court hears gay marriage cases tomorrow and Wednesday

The Supreme Court may choose caution over boldness. "[T]he court’s first full examination of whether the right to marry must be extended to same-sex couples puts on full display the justices’ official responsibility as arbiter of the Constitution, as well as its unofficial role as interpreter of the nation’s readiness for social change...Kennedy told a questioner he did not find it ideal that the court was recently at the center of so many important questions on social issues and civil rights." Robert Barnes in The Washington Post.

They rule in the long shadow of Roe v. Wade. "Judges, lawyers and scholars have drawn varying lessons from that decision, with some saying that it was needlessly rash and created a culture war...Briefs from opponents of same-sex marriage, including one from 17 states, are studded with references to the aftermath of the abortion decision and to Justice Ginsburg’s critiques of it. They say the lesson from the Roe decision is that states should be allowed to work out delicate matters like abortion and same-sex marriage for themselves." Adam Liptak in The New York Times.

The judges are just getting started. But the political debate over gay marriage is basically over. "A look inside the numbers makes the case even more strongly. It’s no secret that the issue divides strongly along generational lines, with 80 percent of those ages 18 to 29 supportive of gay marriage, compared with 44 percent of those older than 65. But what’s remarkable is that the generational divide on the question is stronger than the partisan one." Chris Cillizza in The Washington Post.

There's a line forming outside of the Supreme Court to witness oral argument. "Nearly 30 people formed a line in front of the Supreme Court over the weekend, hoping for one of the roughly 50 seats reserved for the public to witness arguments in the landmark same-sex marriage case that begins on Tuesday." Jada F. Smith in The New York Times.

Millenials are the political engine behind gay marriage. "Michael Dimock, director of Pew Research Center for the People and the Press, tells Don Gonyea, host of weekends on All Things Considered, that the pace at which millennials back gay marriage has rarely been matched...Shifting views, even among Republicans, create practical political challenges for leaders of the GOP looking at how the issue will affect voters...The shift in attitudes toward same-sex marriage has been steady and fast. But whether that movement will eventually lead to any kind of policy shift within the Republican Party remains an open question." NPR Staff.

Would flipping on gay marriage doom the GOP? "Republicans over 65, the party’s most reliable voters, opposed gay marriage by a 68-25 margin. It’s relatively easy for Rob Portman, three-odd years away from a primary, to flip on gay marriage. It’s harder to calculate the costs for Republicans if they “evolve” on gay marriage now, or if activists think they see them evolving...'Committed Christians make up a huge voting bloc within the GOP,' said A.J. Spiker, the 32-year-old chairman of the Iowa Republican Party. The 'Ken Mehlman sliver of the party,' he said, didn’t play in Iowa. 'We can't win elections without committed Christians staying engaged.'" Dave Weigel in Slate.

Judge a book by its fake cover interlude: If Quentin Tarantino screenplays were packaged as classic Penguin books.

3) Background checks or bust? What if it's bust?

Obama wants gun control done. "Three months after an elementary school massacre in Connecticut reignited a debate over the nation’s gun laws, President Obama is urging Congress to 'join me in finishing the job' by taking swift action on gun-control legislation. Obama, in his weekly radio address released on Saturday, noted the preliminary steps taken in the Senate to advance such measures as universal background checks for all gun buyers and a federal crack-down on gun trafficking. But he chastised Congress for the slow pace of progress, contrasting their indecision with the widespread popular support across the country for strengthening the background check system and other proposals." Philip Rucker in The Washington Post.

Will we get a compromise instead? "Discussions with Senator Tom Coburn, who is seen as key to getting background checks passed, are back on again after previously falling apart, according to sources familiar with the talks. And Senate Democrats have made Coburn a new compromise offer:...All private sales would get background checks (except family members). All background checks done on private sales that are done through a commercial venue — say, via a gun clearinghouse Web site like ArmsList.com or at a gun show — would see their records kept by a federally licensed firearms dealer...[A]ll private sales not done through a commercial venue would get a background check but a record would not be kept. This would mean records wouldn’t be kept for acquaintance-to-acquaintance or friend-to-friend sales." Greg Sargent in The Washington Post.

@afrakt: The argument that you have to be a gun user to speak out about gun control is silly. If you can take a bullet, you have standing.

Did Newtown really change the politics of gun control? "The decision this week by Senate Majority Leader Harry Reid to drop the assault weapons ban and a ban on high-capacity clips from the broader Congressional effort to curb gun violence sent an unmistakable message: the murders of 20 children in Newtown, Connecticut in late 2012 has not changed politics as much as many people thought it might." Chris Cillizza in The Washington Post.

@samsteinhp: New Q poll: "88 – 10 percent support for universal background checks, including 85 – 13 percent among gun owners."

McCain, a key senator in the fight over background checks. "McCain and Sens. Susan Collins (R-Maine) and Dean Heller (R-Nev.) are at the top of a list of Republicans considered most likely to sign on to legislation expanding background checks after talks with Sen. Tom Coburn (R-Okla.) stalled earlier this month. Sen. Mark Kirk (R-Ill.) has signaled he will likely support the yet-to-be-finalized proposal...The proposal includes modifications to attract Republican support. One would let rural gun owners conduct background checks from their home computers. Another would give military veterans who have been declared mentally unfit to own a gun a process for appealing that finding." Alexander Bolton in The Hill.

Bloomberg launches $12M gun-law campaign. "New York City Mayor Michael Bloomberg on Saturday announced he is targeting senators in a $12 million ad buy ahead of the gun-control debate expected on the floor next month. The group that Bloomberg co-chairs, Mayors Against Illegal Guns, will run ads in 13 states during the Easter and Passover recess focused on expanding background checks for gun purchases. The group identified a mix of 15 vulnerable Democrats, swing-state lawmakers and solidly supported Republicans in states." Elizabeth Titus in Politico.

Watch: "Family" and "Responsible," two of the ads being launched.

The racial impact of gun deaths. "Gun deaths are shaped by race in America. Whites are far more likely to shoot themselves, and African Americans are far more likely to be shot by someone else. The statistical difference is dramatic, according to a Washington Post analysis of data from the U.S. Centers for Disease Control and Prevention. A white person is five times as likely to commit suicide with a gun as to be shot with a gun; for each African American who uses a gun to commit suicide, five are killed by other people with guns." Dan Keating in The Washington Post.

FRUM: The roots of the gun culture in America. "The most arresting idea in Adam Winkler's impressively learned study of US gun law, Gunfight, is the suggestion that contemporary American gun culture was more or less invented by the Black Panthers...They regarded government - the white man's government - as the oppressor and the police - the white man's police - as the enemy. They carried their arms against the government and against the police. The gun symbolized and guaranteed their rights. And the gun they most valued was not the policeman's revolver, not the sportsman's shotgun, but the military style weapon with its distinctive extended magazine." David Frum in The Daily Beast.

Woah interlude: Approximating the Mona Lisa, using 150 circles and a genetic algorithm.

4) Corporate tax reform, another second-term priority?

Everybody's waiting to do corporate tax reform. "It’s becoming clear that if corporate tax reform happens, it will have to be linked to a rewrite of the individual Tax Code. That will require lawmakers to finally strike a deal on the thorny issues that have long hobbled individual reform: namely, what to do with popular provisions like the deductions for charitable contributions and mortgage interest...Perhaps the biggest conundrum that must be resolved to win an individual overhaul — and therefore corporate reform — is whether the changes should generate revenue for the government and, if so, what that money should be used for." Steven Sloan in Politico.

Congress is looking at tax reform for corporate finance, too. "US lawmakers are considering limiting the tax deductibility of interest payments for businesses, a measure that would dramatically transform corporate finance in America by reducing the bias towards debt in the tax code...Among developed countries, the US has the widest gap in the tax treatment of corporate investments with debt, which is extremely favourable, compared with equity, which is much less so." James Politi in The Financial Times.

Documentary interlude: On life at the cellular level.

5) Update on Cyprus

Cyprus gets a new bailout deal. "Officials said they believe the country will now need strict controls on money transfers in and out of the economy in the coming weeks or possibly months...Cyprus could see its economy contract by 10% or more in the years ahead, officials and economists said...The deal lines up €10 billion ($13 billion) in financing for the government and shuts Cyprus's second-largest bank, Cyprus Popular Bank PCL, imposing steep losses on deposits with more than €100,000, European officials said. The country's largest bank, Bank of Cyprus PCL, will also be downsized aggressively, with large depositors there taking a hit." Gabriel Steinhauser, Matthew Dalton, and Alkman Granitsas in The Wall Street Journal.

Exeunt Russi. "While it remains to be seen how Cyprus’s many Russian businessmen will be affected by the proposed bailout and what comes after, most appear to have one foot out the door already. They are now considering to which jurisdiction they will move their businesses and how." Courtney Weaver in The Financial Times.

Cyprus speaks to much larger problems of collective action in the euro area. "What happened last week is a fitting example of European political leaders, in a most unprofessional pursuit of narrow national interests, failing to defend the common good. The main risk I want to emphasise is, however, not a big accident. It might happen, of course. But I suspect the single biggest risk ultimately stems from the eurozone’s repeated policy errors. Their effect is slow but cumulative." Wolfgang Munchau in The Financial Times.

Reading material interlude: The best sentences Wonkblog read today.

Wonkblog Roundup

What secret emails from Enron teach us about trying to influence politiciansDan Hopkins.

Move over, Cyprus. Slovenia, welcome to the epicenter of worryDylan Matthews.

Obamacare's five biggest challengesSarah Kliff.

China may stop flooding the global market with cheap solar panelsBrad Plumer.

Et Cetera

Highly recommended: NPR has a stunning multimedia piece, "Unfit for Work," on the rise of disability in AmericaChana Joffe-Walt for Planet Money, NPR.

The VA's enormous backlog will be gone by 2015, Shinseki pledgesAaron Blake in The Washington Post.

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

Wonkbook is produced with help from Michelle Williams.

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Dylan Matthews · March 24, 2013