That applause perhaps explains more than the policy jockeying. At this point, Democrats have agreed to cuts slightly in excess of the Republican leadership’s original demands (though still below the Tea Party’s demands). As Michael Gerson writes, “given that Republicans control only the House, this level of cuts would normally be viewed as a remarkable success. But a portion of the Republican conference longs for a confrontation that results in a government shutdown, preferring a fight over a victory.”
In the end, the same must be said of Paul Ryan’s 2012 budget proposal (which, if you scroll down, gets a special section in today’s Wonkbook). You can and should admire his policy ambition, but he is looking for a confrontation, not a compromise. For little obvious reason, his budget repeals the Dodd-Frank financial regulation law and cuts back on green-energy development in deference to domestic production. Neither policy has much budget impact, but both are a thumb in the eye to liberals. Elsewhere, his budget looks to privatize Medicare, slash Medicaid and food stamps and sharply cut non-defense discretionary spending -- but while it does all this, it locks in the Bush tax cuts and then cuts corporate taxes. There is nothing in this budget, in other words, that would help a moderate Democrat make the tough choice to vote for it. The sacrifices aren’t shared, and there’s not even a token break with conservative orthodoxy. The GOP has decided that there’s more to be gained through drawing a sharp contrast than trying to win converts. That’s rarely been true in American politics, and I don’t expect it will be true now.
Five in the morning
1) We look to be headed for a shutdown, report Paul Kane and Perry Bacon: “The first federal government shutdown in more than 15 years drew closer Tuesday as President Obama and congressional leaders failed to make progress on a budget for 2011 after back-to-back meetings at the White House and on Capitol Hill. Obama and Congress remained billions of dollars apart and at odds over where to find savings after an 80-minute West Wing meeting that included House Speaker John A. Boehner (R-Ohio) and Senate Majority Leader Harry M. Reid (D-Nev.). In the meeting, Boehner floated the possibility that he may seek as much as $40 billion in cuts, $7 billion more than the two sides have been discussing for the past week. Growing irked by the prolonged negotiations, Obama demanded that the congressional leaders ‘act like grown-ups.’”
2) Paul Ryan has formally unveiled the GOP’s budget proposal, report Lori Montgomery and Philip Rucker: “Drafted by House Budget Chairman Paul Ryan (R-Wis.), the proposal aims to eventually shrink federal spending, measured against the economy, to its lowest level since 1949. Ryan said the plan would create jobs, promote growth, and rebuild an economy ravaged by recession and ‘relentless government spending, taxing and borrowing.’...Congressional Democrats attacked the plan as an extreme attempt to balance the budget on the backs of the most vulnerable Americans. House Minority Leader Nancy Pelosi (Calif.) blasted it on Twitter as ‘a path to poverty for America’s seniors children and a road to riches for big oil.’...Ryan’s plan would take nearly 30 years to wipe out deficits completely.”
Download Ryan’s full budget proposal: http://1.usa.gov/hY11sX
Read a short summary: http://wapo.st/dOLPTI
Read CBO’s take: http://1.usa.gov/hqxgG9
3) Boehner has raised his request to $40 billion in cuts, reports David Rogers: “President Barack Obama warned Tuesday that he would not sign another stopgap spending bill without an agreement first on the 2011 budget, even as Republicans upped the ante, signaling that a $40 billion package of cuts might have the makings of a deal to avert a shutdown Friday. Speaker John Boehner’s office refused comment, but several individuals, Republican and Democratic, confirmed that the Ohio Republican had raised the $40 billion number at a morning meeting at the White House with the president. That translates into a $1.048 trillion top line for nonemergency appropriations, an $80 billion reduction from Obama’s 2011 budget request and more importantly, an additional $7 billion on top of the target in House-Senate talks. Administration officials expressed frustration with the demands, and there are growing complaints the speaker keeps “moving the goal posts” as he tries to appease conservatives in his party.”
4) John Boehner is trying to persuade his members that a shutdown won’t be good for them, report John Bresnahan and Jake Sherman: “Speaker John Boehner is warning his Republican colleagues that Democrats would ‘win’ a government shutdown and the GOP would suffer a political catastrophe if the federal government runs out of money at the end of this week. ‘The Democrats think they benefit from a government shutdown. I agree,’ Boehner said during a closed-door, 90-minute meeting on House Republicans on Monday night, according to several lawmakers who attended the session. Boehner’s opinion was quickly backed up GOP lawmakers who were serving in Congress during 1995, when former Speaker Newt Gingrich (R-Ga.) squared off with then-President Bill Clinton by shutting down the government twice.”
5) Republicans will be blamed for a shutdown, writes Michael Gerson: “Obama’s offer is more than reasonable. A $30 billion reduction, after all, was the initial Republican negotiating position back in early February. Given that Republicans control only the House, this level of cuts would normally be viewed as a remarkable success. But a portion of the Republican conference longs for a confrontation that results in a government shutdown, preferring a fight over a victory. And the only worse outcome for Boehner than a politically risky shutdown is a deeply split conference, pitting the Republican establishment against Tea Party purists -- a result that would undermine all future Republican progress. So Obama has managed to lighten his liberal baggage, turn Republicans against each other and ensure they would be (justifiably) blamed for a shutdown.”
Cover song interlude: The Low Anthem plays “A Shot in the Arm” by Wilco.
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Still to come: More details on, and more reactions to, Ryan’s proposed budget; 1099 repeal is headed to the president; the Obama administration is pressing forward on expanding wireless broadband; the House GOP is backing off on attacking the EPA in the budget; and a vintage Looney Tunes short.
Ryan Details and Reax
Paul Ryan’s budget estimates are very optimistic, report Jim Tankersley and Katy O’Donnell: “If Rep. Paul Ryan’s newly unveiled 2012 budget is signed into law, this is what Ryan’s economic forecasters say will happen: The unemployment rate will plunge by 2.5 percentage points. The still-sinking housing market will roar back in a brand new boom. The federal government will collect $100 billion more in income tax revenues than it otherwise would have. And that’s just in the first year. By 2015, the forecasters say, unemployment will fall to 4 percent. By 2021, it will be a nearly unprecedented 2.8 percent. The tax and spending roadmap put forth Tuesday morning by Ryan, the Wisconsin Republican who heads the House Budget Committee, is backed by a set of extremely optimistic assumptions about how the budget would stimulate private investment, hiring, and broad economic growth.”
Ryan’s budget plan includes big tax cuts, reports John McKinnon: “The House Republicans’ tax plan for the next fiscal year promises to lower rates and boost economic growth, while holding federal revenue more or less steady as a share of the economy...The GOP plan would overhaul the tax codes for individuals and businesses. Aiming to promote economic growth, it would lower the top tax rates for individuals and corporations to 25%, from the current 35%. It also promises to reduce the number of individual tax brackets from six. To raise revenue needed to offset the rate cuts, the plan would reduce or eliminate an unspecified number of tax breaks, such as deductions and credits. The plan would also repeal several tax increases from the 2010 health-care law, including the 3.8% surtax on higher earners’ investment income.”
Two thirds of Ryan’s program cuts fall on lower-income Americans, the Center for Budget and Policy Priorities argues: “House Budget Committee Chairman Paul Ryan’s budget plan would get about two-thirds of its more than $4 trillion in budget cuts over 10 years from programs that serve people of limited means, which violates basic principles of fairness and stands a core principle of President Obama’s fiscal commission on its head...Actual program cuts produce net savings of $4.322 trillion. Cuts in low-income programs appear likely to account for at least $2.9 trillion -- or about two-thirds -- of this amount. The $2.9 trillion includes the following three categories of cuts: $2.17 trillion in reductions from Medicaid and related health care...$350 billion in cuts in mandatory programs serving low-income Americans (other than Medicaid)... $400 billion in cuts in low-income discretionary programs.”
Seniors would pay much more for Medicare under Ryan’s proposal, report Julie Appleby, Mary Agnes Carey, and Laurie McGinley: “Seniors and the disabled would pay sharply more for their Medicare coverage under a new plan by House Republicans aimed at curbing the nation’s growing deficit, a Congressional Budget Office analysis shows. For example, by 2030, under the plan, typical 65 year olds would be required to pay 68 percent of the total cost of their coverage, which includes premiums, deductibles, and other out-of-pocket costs, according to CBO. That compares with the 25 percent they would pay under current law, CBO said. The GOP budget proposal also would raise the eligibility age for the politically popular program - and repeal big chunks of the health care overhaul law approved by Congress last year.”
Liberals should back Ryan, writes Jacob Weisberg: “Ryan’s proposal to turn Medicare into a voucher provides an easy political target. But it’s hard to make a principled liberal case for the program in its current form. To do so, you have to argue that government-paid health care should be a right only for people over the age of 65, and for no one else. Medicare covers doctor and hospital bills at 100 percent, regardless of income. This gives doctors and patients an incentive to maximize their use of the system and waste public resources. Choosing to pay 100 percent of Warren Buffett’s medical bills while cutting Head Start reflects a strange set of social priorities, to say the least...Effectively constraining the growth of Medicare could make it possible for Democrats to do a lot else that’s important to them in the future.”
Ryan’s asking the wrong people to bear the burden of the debt reduction, writes Harold Meyerson. “A decade ago, some conservatives were still talking about ‘national greatness conservatism.’ Ryan’s budget is a manifesto for national puniness conservatism. The cover under which Ryan and other Republicans operate is their concern for the deficit and national debt. But Ryan blows that cover by proposing to reduce the top income tax rate to just 25 percent. He imposes the burden for reducing our debt not on the bankers who forced our government to spend trillions averting a collapse but on seniors and the poor. The reductions in aid to the poor, says the budget blueprint that Ryan released, will be made “to ensure that America’s safety net does not become a hammock that lulls able-bodied citizens into lives of complacency and dependency.” That’s a pretty good description of America’s top bankers, but Ryan’s budget showers them with tax cuts.”
The political deck is still stacked against Ryan, writes Catherine Rampell: “We already have a number of ‘serious’ long-term fiscal restraint proposals on the table. Last year there was the Simpson-Bowles commission report. There was also a proposal from the Bipartisan Policy Center’s Debt Reduction Task Force, let by Alice Rivlin and Peter Domenici...None of these myriad proposals have ever gotten any traction, and they have, for the most part, been less drastic than Mr. Ryan’s. They’ve failed not because they were unserious, but because even these less drastic measures were too politically unpopular. For this reason, I’m not betting any money that the Ryan plan, with its even more painful provisions cutting entitlements, will somehow be more politically palatable in the near future.”
Ryan’s budget makes the case for tax hikes, writes David Wessel: “Mr. Ryan may inadvertently be making the case for tax increases. Reason one: Even with the spending cuts he proposes, Mr. Ryan wouldn’t balance the budget until 2030 or so. Republicans, reluctant to raise the debt ceiling to cover past spending, would be asked to increase it every year until then because debt, measured in dollars, keeps climbing. Reason two: The most far-reaching change he proposes--limiting the sum the government will spend on each Medicare beneficiary’s health care--won’t save a nickel for a decade. Grandfathering today’s retirees, as nearly everyone wants to do, means savings from Medicare changes don’t arrive quickly. Reason three: Even without many of the details, and there aren’t many, the Ryan plan shows how severe the spending cuts would have to be to avoid raising taxes.”
Ryan shouldn’t have taken defense cuts and tax hikes off the table, write Alan Simpson and Erskine Bowles: “While we are encouraged that Chairman Ryan has come forward with a serious plan, we are concerned that it falls short of the balanced, comprehensive approach needed to achieve the broad bipartisan agreement necessary to enact a responsible plan. The plan largely exempts defense spending from reductions and would not apply any of the savings from eliminating or reducing tax expenditures as part of tax reform to deficit reduction. As a result, the Chairman’s plan relies on much larger reductions in domestic discretionary spending than does the Commission proposal, while also calling for savings in some safety net programs - cuts which would place a disproportionately adverse effect on certain disadvantaged populations.”
My take: Ryan’s plan might revive Simpson-Bowles: “I wouldn’t be surprised if, a year from now, it’s broadly agreed that the main thing Paul Ryan’s budget did was persuade Democrats — and perhaps some Republicans — to adopt something pretty close to the Fiscal Commission’s recommendations (which are currently being turned into legislation by a bipartisan group of senators). There are real similarities between the two plans. Perhaps most importantly, the Ryan budget and the Fiscal Commission rely on similar mechanisms to reduce the deficit: They both cap stuff. But the Fiscal Commission’s caps are more flexible and fair than those in the Ryan budget; the Fiscal Commission makes revenues part of the solution, where the Ryan budget includes a deficit-busting tax cut; and the Fiscal Commission doesn’t try to sneak an ideological wish list into law under the cover of deficit reduction.”
Ryan’s plan shifts risk from the government to households, writes James Kwak: “The Ryan plan...eliminates part of the insurance component of Medicare. Some insurance against being poor is still there: the funding comes via payroll taxes, but everyone gets the same benefit. (Actually, the benefits are a tiny bit progressive, since the top 8 percent by income get smaller vouchers.) But there’s no insurance against volatility of health care costs. If health care grows more slowly than projected, beneficiaries will be better off than if it grows as projected (but probably still worse off than under traditional Medicare); but if it grows faster than projected, they will be even worse off. In other words, we’ve taken the risk of health care inflation and transferred it to households.”
We should at least admire Ryan’s approach to politics, writes Ross Douthat: “Even the most socialist-sympathizing, Paul Wellstone-idolizing, single-payer-dreaming left-winger should be able to draw a kind of inspiration from the doggedness and discipline with which Ryan pushed his ideas from the margins of the party to the mainstream. This is how we should want all our legislators to approach the people’s business, whether they’re liberal or conservative or somewhere in between -- putting what they consider good policy above what everyone else in their party considers good politics. Too few of them do. But for the ones who try to make real substance their touchstone, rather than just partisan advantage, today should be a hopeful day.”
Ryan is too easy on the elderly, writes David Leonhardt: “The Ryan plan would let anyone who turns 65 before 2022 continue to be part of this hugely popular welfare program. In fact, Mr. Ryan would scrap the common-sense attempts to slow costs in last year’s health bill, like the baby steps to base Medicare coverage decisions more on medical evidence. If you’re 55 or older, you get the same old Medicare, with its same soaring budget...Beside violating basic notions of fairness, the grandfather clause has the potential to slow economic growth. Many of today’s 55- and 60-year-olds are going to be on Medicare for a long time. If the program doesn’t change, they will run up trillions of dollars in medical bills. That money won’t be available for education, early child care, scientific research or high-tech infrastructure -- all of which can lift growth.”
The plan isn’t a productive way to start to negotiations, writes Clive Crook: “The Ryan budget as a whole is a frontal assault on the administration’s priorities. You might say: Mission accomplished. A frontal assault is what the GOP promised. But what, exactly, does this achieve? What hope of compromise does a plan like this allow? The US system of government divides power between the parties, an obvious fact, but one that the contending forces on Capitol Hill lately find hard to take in. How do you get from unyielding, no-surrender proposals like this to workable commonsense reforms that actually confront the problem? In short, how do you get from a posture to a policy? The ongoing shambles over the continuing resolution and the immediate budget impasse suggests one rather disturbing answer. You don’t.”
House Democrats will oppose a one-week stopgap spending bill: http://bit.ly/f32pXS
The Fed is predicting a steady recovery, reports Neil Irwin: “Global turmoil and potentially steep budget cuts have heightened economic uncertainty, Federal Reserve leaders concluded at their last policy meeting. Yet the nation’s recovery was still on track, the officials said in choosing to maintain their current bond-buying policy. Fed officials held to the expectation that the U.S. economy will keep expanding in 2011, according to minutes released Tuesday of the March 15 meeting. They will continue buying $75 billion in Treasury bonds each month as previously planned, but the minutes gave no hints that the Fed will extend the program after that. The document reveals a mix of views among Fed officials on when to start pulling away from the banks’ extreme efforts to support growth.”
Mortgage servicers have agreed to change their foreclosure practices: http://nyti.ms/gW3PDc
A group of Democrats want to suspend Congressional pay during a shutdown, reports Felicia Sonmez: “A group of 21 Senate Democrats is urging House Republican leaders to move forward on a measure that would bar lawmakers and the president from getting paid in the event of a government shutdown. But stopping Congress and the president from getting paid is no simple matter, as several House votes last week illustrated, and the same measure the Senate Democrats are promoting has been declared unconstitutional by a White House liaison. ‘Our bill is simple: If we cannot do our work and keep the government functioning, we should not receive a paycheck,’ the Senate Democrats wrote to House Speaker John Boehner (R-Ohio). ‘If we cannot compromise and meet each other halfway, then we should not be paid.’”
The US and Colombia will announce a revamped trade agreement soon: http://on.wsj.com/ihCiV5
Retro Looney Tunes interlude: Bugs Bunny and Elmer Fudd in “The Big Snooze”.
Julie Appleby, Mary Agnes Carey, Phil Galewitz, Marilyn Werber Serafini and Christopher Weaver explain what Ryan’s budget means for Medicare: “Ryan (Wis.) would convert Medicare from an entitlement program with defined benefits to an insurance system with a defined government contribution -- and far greater reliance on private insurance. Using an idea called ‘premium support,’ it would give Medicare beneficiaries -- currently 47 million people who are age 65 or older or who have disabilities -- a fixed sum of money to buy their own coverage...Many of the details for the revisions to Medicare must be hammered out by congressional committees. That leaves some unanswered questions, including the dollar amount each enrollee would have to purchase insurance -- and how much that would rise in future years. Would it go up only with general inflation, by the much higher medical inflation rate or something in between?”
Texas stands alone in refusing to set up insurance exchanges as part of health care reform: http://politi.co/h8O890
The Senate has sent a repeal of health reform’s tax reporting provision to Obama’s desk, reports Felicia Sonmez: “The Senate on Tuesday voted overwhelmingly to repeal the health-care law’s 1099 tax-reporting provision, ending nearly a year’s worth of efforts to do away with one of its most unpopular requirements. The repeal measure, which passed the House last month, now goes to President Obama for his signature...The final vote was 87-to-12 to repeal the provision that requires businesses to report to the Internal Revenue Service all purchases of $600 or more. The Senate-passed bill would cover the estimated $22 billion cost of eliminating the provision by forcing greater repayment of health insurance subsidies for families whose income unexpectedly exceeds certain thresholds.”
The administration is moving ahead with a plan to expand wireless broadband, reports Cecilia Kang: “The Obama administration will make an economic case on Wednesday for moving ahead with a controversial auction of broadcast airwaves, even as some analysts argue that AT&T’s proposed merger with T-Mobile throws a wrench into the plan. The administration’s goal to blanket the country with wireless high-speed Internet connections has been pitched as an economic opportunity to create high-tech jobs that also help the U.S. compete globally. To carry out that goal, Obama said he hopes to raise $27.8 billion over the next decade from auctions of broadcast channels that would be converted into wireless networks to connect smart phones and tablets to the Internet.”
Ryan’s budget cuts billions from Pell Grants, writes Pat Garofalo: http://bit.ly/dV6j5z
8-bit interlude: A supercut of video game deaths.
Republicans are willing to compromise on anti-EPA riders, reports Robin Bravender: “House Republicans are willing to deal when it comes to budget riders to hobble the EPA. One of the many sticking points in the budget brawl under way on Capitol Hill is the slew of controversial amendments House Republicans are pushing for in a short-term spending bill -- including riders to limit federal spending on EPA rules, Planned Parenthood and other hot-button issues. But many GOP lawmakers -- including staunchly conservative freshmen -- say they’re not drawing lines in the sand when it comes to hamstringing the Obama administration’s environmental policies...House Republicans appear willing to use other venues like stand-alone bills or future budget deals to attack agency rules.”
The White House reiterated its threat to veto anti-EPA legislation: http://bit.ly/hxhYRi
The Senate is near a deal that would allow votes on anti-EPA amendment, reports Andrew Restuccia: “Key senators said Tuesday they are very close to a deal on small business legislation that would pave the way for votes on amendments to block or limit Environmental Protection Agency climate change regulations. Sen. Tom Coburn (R-Okla.) is blocking a unanimous consent agreement on the small business legislation over amendments he offered to the bill. One of the amendments in question would eliminate ethanol subsidies. Reid, speaking to reporters Tuesday, expressed confidence that an agreement could be reached on the Coburn amendments, allowing the bill to move forward. ‘Well, I think we have that almost worked out,’ Reid said when asked about whether there will be a vote on a series of amendments to the small business bill that would block or limit EPA climate rules.”
Closing credits: Wonkbook is compiled and produced with help from Dylan Matthews and Michelle Williams.