The negotiation that we're having, in theory, is how to cut the deficit in order to give politicians in both parties space to increase the debt limit. But if you look closely at the positions, that's not really the negotiation we're having. Republicans are negotiating not over the deficit, but over tax rates and the size of government. That's why they've ruled revenue "off the table" as a way to reduce the deficit, and why they are calling for laws and even constitutional amendments that cap federal spending rather than attack deficits. Democrats, meanwhile, lack a similarly clear posture: most of them are negotiating to raise the debt ceiling, but a few are trying to survive in 2012, and a few more are actually trying to reduce the deficit, and meanwhile, the Obama administration just met with the Senate Democrats to ask them to please, please, stop laying down new negotiating markers every day.
If we were really just negotiating over the deficit, this would be easy. The White House, the House Republicans, the House Progressives, the House Democrats and the Senate Republicans have all released deficit-reduction plans. There's not only apparent unanimity on the goal, but a broad menu of approaches. We'd just take elements from each and call it a day. But if the Republicans are negotiating over their antipathy to taxes and their belief that government should be much smaller, that's a much more ideological, and much tougher to resolve, dispute. The two parties don't agree on that goal. And if the Democrats haven't quite decided what their negotiating position is, save to survive this fight both economically and politically, that's not necessarily going to make things easier, either. Negotiations are hard enough when both sides agree about the basic issue under contention. They're almost impossible when they don't.
Five in the morning
1) Obama doesn't want Dems laying down markers in the debt limit fight, report Perry Bacon and Zachary Goldfarb: "President Obama urged members of his party Wednesday to avoid declaring absolute positions in the debate on increasing the federal debt ceiling, a day after House Speaker John A. Boehner (R-Ohio) said that tax increases were 'off the table' as part of any agreement. In an hour-long session with Senate Democrats at the White House, Obama told his former colleagues not to 'draw a line in the sand' in negotiations, said Senate Majority Leader Harry M. Reid (Nev.). Showing an unwillingness to compromise, Obama said, would not only limit the ability to reach a deal with Republicans but could also have a negative impact on financial markets."
2) Mitt Romney is unveiling his health-care plan today. This USA Today op-ed previews it. My take: "Romney made the only move left to him — and to the Republican Party. A capsule history of health-care reform is that Democrats began with single-payer and Republicans, led by Richard Nixon, countered with an employer-based system. Then, in the 1990s, Democrats proposed an employer-based system and Republicans countered with an individual mandate — which Romney actually passed in Massachusetts in 2005. Then, in 2009, Democrats proposed a system based around an individual mandate and Republicans countered with a vague promise to 'repeal-and-replace.' They were out of ideas. The only solution-like proposal left on the table is to devolve responsibility to the states, and Romney is smart to get there first. The question, I think, is whether the GOP unites around some version of this idea or whether Romney has become so radioactive on health care that by proposing a federalist solution, he actually takes it off the table for the Republicans running against him."
3) Business groups are lobbying hard for a debt ceiling increase, report Damian Paletta and Deborah Solomon: "Sixty-two business groups, including the American Gas Association, the Telecommunications Industry Association, and the National Association of Manufacturers, urged congressional leaders on Wednesday to raise the federal debt ceiling amid fears that political brinkmanship could lead to another financial crisis...The letter comes less than one week before the U.S. government is expected to hit the $14.294 trillion debt ceiling. Treasury has already taken steps to avoid defaulting on its obligations, but officials believe it will run out of maneuvers on Aug. 2. They have asked Congress to raise the ceiling as soon as possible, but many Republicans and some Democrats want spending cuts to be part of any deal to raise the limit."
4) No GOP Reps will vote for a clean debt limit bill, reports Russell Berman: "A bill to raise the debt limit without spending cuts attached would not get a single Republican vote in the House, the GOP’s top vote-counter said Wednesday. I can tell you as the whip, there is not one Republican vote on a negative-debt-limit bill where no cuts are proposed,' House Majority Whip Kevin McCarthy (R-Calif.) told reporters at a news conference. While Republicans have demanded significant spending cuts and budget reforms in exchange for authorizing more U.S. borrowing, a majority of the House Democratic caucus has called for a 'clean' debt ceiling vote, saying the GOP is holding hostage the full faith and credit of the federal government."
5) Negotiation experts aren't impressed by Congress' debt ceiling talks, reports David Fahrenthold: "Amateurs. That’s the frustrated conclusion that America’s professional negotiators have reached, after watching Washington’s politicians begin their own negotiation over the national debt ceiling. These professionals are ex-FBI agents, labor mediators, divorce counselors. They have learned the rules that help resolve unsolvable standoffs: Don't lie to a man on a high ledge. Don’t box yourself in with sweeping threats. Don’t tell your adversary to 'act like an adult.' Now, they have watched the two parties bend or break those three rules. They worry that the politicians' mistakes might only prolong their dispute -- at a moment where every day of delay adds to Wall Street’s worries. And it bugs them to see their art practiced this way."
College rock interlude: Dean Britta cover "Indian Summer" by Beat Happening.
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Still to come: A Fannie/Freddie compromise may be in the offing; Florida's Medicaid overhaul is raising eyebrows; the Pentagon won't implement across-the-board cuts; how much Exxon pays in taxes depends a lot on how you look at it; and opening a champagne bottle using only a wine glass.
The House appropriations chair wants $30 billion in cuts next year, reports Corey Boles: "A senior House Republican on Wednesday proposed cutting federal spending by $30 billion in the 2012 fiscal year from current levels. House Appropriations Chairman Hal Rogers (R., Ky.) unveiled an outline spending plan that calls for cutting virtually every area of the federal government. The one exception would be defense spending, which would increase $17 billion from current levels. It will now be up to the separate appropriations subcommittees to draw up individual spending bills incorporating the broad spending targets for the 2012 fiscal year, which begins on Oct. 1. Mr. Rogers's spending outline contained few details on how the individual committees would reach this $30 billion reduction."
A bipartisan duo has unveiled a Fannie/Freddie compromise that just might pass, reports Nick Timiraos: "Two lawmakers...are set to unveil legislation Thursday to replace mortgage giants Fannie Mae and Freddie Mac with at least five private companies that would issue mortgage-backed securities with explicit federal guarantees. The measure is a compromise between conservative Republicans who have advanced bills to build a mostly private mortgage-finance system and Democrats, who say the government shouldn't abandon the mortgage market...Analysts say that the compromise proposed by Rep. John Campbell (R., Calif.) and Rep. Gary Peters (D., Mich.) may be the only plan likely to attract sufficient support from both parties on a politically explosive subject, particularly at a time when gridlock looms over issues such as how to curb federal spending."
A corporate tax holiday bill has been introduced, report Corey Boles and John McKinnon: "A fight over a proposed corporate-tax holiday for U.S. multinationals broke into the open on Wednesday. A bipartisan group of House lawmakers introduced legislation allowing U.S. multinationals to bring overseas profits home temporarily at a reduced tax rate. A prominent Democratic critic of the idea promptly denounced the plan, saying it would be too costly to the government’s finances. The legislation opening the so-called repatriation window is aimed at encouraging U.S. companies to bring home what sponsors estimate is $1 trillion in profits. The money now is parked offshore in order to avoid the 35% U.S. corporate tax rate, among the world’s highest."
Obama needs to break his anti-tax hike pledge, writes William Galston: "There’s not much that can be squeezed out of the bottom four income quintiles (households making less than $100,000 per year). On the other hand, relying solely on the rich for added revenues would imply tax rates in excess of 75 percent. But what about the well-off but not rich--those in the fifth quintile who earn between $100,000 and $250,000 a year? Can they really be held harmless?...It’s the well-off but not rich (i.e. the top quintile excluding the very rich) that benefits massively and disproportionately from itemized deductions and exclusions from taxable income. In other words, while it may make political sense to shield households that fall between the 80th and the 98th income percentiles (i.e. those making between $100,000 and $250,000 per year) from tax increases, we won’t raise much revenue if we do."
John Boehner must think Americans are idiots, writes Matt Miller: "How can a party that just passed a budget blueprint with historic new levels of debt and virtually no middle-class entitlement reform in the next decade try, with a straight face, to pin the blame for a debt-limit increase on the president? The only plausible answer is that they think it will 'work' politically. That means they think the press is too docile and stenographic to expose the con. And that the public is too dumb or tuned out to care, even if the press does its duty. One of the saddest commentaries on the quality of our civic culture today is that political operatives know these are both fairly good assumptions. This explains why Boehner can say things such as 'with the exception of tax hikes...everything is on the table' and not be laughed out of town."
Videos you can use interlude: How to open a bottle of champagne with a wine glass.
Florida's drastic Medicaid overhaul is prompting concern, reports NC Aizenman: "To visit the low-rise medical offices dotting the sun-bleached highways of Broward County is to meet doctors and patients who complain of being guinea pigs in a social experiment gone wrong. They are part of a five-year pilot program designed to test whether Florida can reduce spending on Medicaid, the public insurance program for the poor and disabled, by largely turning the program over to for-profit HMOs. Success would mean getting a handle on one of the fastest-growing and most vexing expenditures confronting states. But it’s unclear whether the pilot, which is also underway in four other counties, has achieved that. Health professionals here say any savings have come at a high cost: the quality of care."
First single-payer advocates want to take Vermont, then the nation, writes David Weigel: The people who want America to adopt a single-payer health care system like to tell a story. It's about how universal care had a demo in one of Canada's less populous provinces, where it proved so popular and successful that the rest of the country couldn't help but copy it...McDermott was telling this story partly to explain why he hadn't just wasted his time. He and Sen. Bernie Sanders, I-Vt., had just rolled out the latest version of their single-payer plan, the American Health Security Act (PDF). There was not much media present; there were no other members of Congress. Sen. Kent Conrad, D-N.D., cast a quizzical look at the event as he passed by walking his dog. The first question to McDermott and Sanders was about why they thought they could pass single-payer health care in 2011 when it couldn't win enough votes even when Democrats controlled both houses of Congress in the last session."
Health care hasn't been a "private product" in decades, writes EJ Dionne: "People who get sick and show up at emergency rooms will get care whether they have insurance or not -- and they should. Under a law signed by President Ronald Reagan -- the Emergency Medical Treatment and Active Labor Act of 1986 -- nearly every hospital is required to offer treatment to those in urgent need of help. The law stops private hospitals from 'dumping' (the term of art in the medical profession) patients onto public hospitals...Health care is anything but a 'private product.' The system is replete with cross-subsidies from hospitals, taxpayers and the already insured...We consider health care a largely public good, but we don’t pay for it that way. That’s foolish."
The Pentagon won't implement across-the-board cuts, reports Nathan Hodge: "The Pentagon is offering new clues on how it plans to meet a White House goal of trimming the military budget by $400 billion over the next decade as it winds down the wars in Iraq and Afghanistan. Speaking at an investment conference Wednesday in New York, Deputy Defense Secretary William Lynn said the department would avoid 'across the board cuts' to military spending, and had launched a process that would identify 'where the nation is willing to accept risk' when it comes to investing in new weaponry...Mr. Lynn's remarks also seem aimed at reassuring a defense industry that is anxious whether the recent killing of Osama bin Laden in Pakistan--and the expected exit of Mr. Gates at the end of June--might accelerate defense cuts."
Student loans aren't a bubble, writes Annie Lowrey: Here's a familiar story. Americans had a near-religious belief in the soundness of this investment. Uncle Sam encouraged it with tax breaks and subsidized it with government-backed loans. But then, in the 1990s and especially the 2000s, easy money perverted the market. Prices detached from reality. Suddenly, millions of Americans found themselves holding wildly overvalued assets. They also found themselves without the salaries or jobs necessary to pay off the huge loans they took out to buy the assets. This is not just the story of American real estate. It is also the story of higher education, at least if you believe the dozens of different thinkers and publications that have come to this conclusion in the past few months. They say that higher education is a bubble, just like housing was a bubble, and that it is getting ready to burst. Famed entrepreneur Peter Thiel, for instance, insists that just about every degree is worth little more than the paper it is printed on: Schooling is not education, he says, and ambitious kids should drop out and skip forward to the workplace. New York magazine calls it one of "this year's most fashionable ideas." But is it really true?"
Harry Reid promises a DREAM Act vote, reports Mike Lillis: "Senate Majority Leader Harry Reid (D-Nev.) on Wednesday vowed to hold a vote on legislation creating a route to legal residency -- and ultimately citizenship -- for illegal-immigrant students. Reid declined to say when the DREAM Act might reach the floor, but he nonetheless urged lawmakers to support the bill, if only for the economic benefits he said it would bring. 'Instead of kicking out of our country people who are educated,' Reid said, 'we should let them work.' Democrats are hoping to capitalize on the momentum provided by President Obama's immigration-reform speech delivered a day earlier. Appearing in El Paso, Texas, Obama urged Congress to get busy on comprehensive reform - including the DREAM Act."
The revolving door is swinging at the FCC, reports Hayley Tsukayama: "Federal Communications commissioner Meredith Baker announced Wednesday that she will resign from the FCC on June 3 and join Comcast-NBC Universal as its senior vice president of governmental affairs. Baker, a Republican, joined the FCC in 2009 after working at the National Telecomunications and Information Administration under President George W. Bush. While at the NTIA, Baker oversaw a $1.5 billion coupon program to help consumers make the transition to digital-only television. In a statement announcing her resignation, Baker said she is most proud of the work she has done with FCC on spectrum reform...The commissioner’s announcement comes four months after voting to approve a merger between Comcast and NBC Universal."
Outsourcing education to for-profit companies has disastrous consequences, writes Gail Collins: "Last week, in Ohio, the State House went for the whole hog and approved legislation that would allow for-profit businesses to open up their own taxpayer-financed charter schools... Now let’s take a look at Texas, which has been leading the way in putting for-profit companies in charge of certifying teachers. 'Very interesting and very disturbing' said Linda Darling-Hammond, a professor of education at Stanford who studies teacher certification issues. Darling-Hammond says that when the federal government began demanding certified teachers in every classroom, Texas was among the states that responded by creating alternative certification programs, some of which have requirements slightly less rigorous than those for the trainers at neighborhood gyms."
Adorable animals trying to stay awake interlude: A baby alpaca resists the call of sleep.
Oil CEOs are in for a grilling in the Senate today, report Stephen Power and Guy Chazan: "With gas prices above $4 a gallon in much of the country, Democrats and Republicans are squaring off over whether to cut tax credits for oil companies enjoying a banner profit year. Senate Democrats plan to grill the CEOs of Exxon Mobil Corp., Chevron Corp., ConocoPhillips and the U.S. units of BP PLC and Royal Dutch Shell PLC about the taxes they pay at a Finance Committee hearing on Thursday. Republicans, who have criticized the Obama administration for not acting faster to approve more offshore drilling, won passage of a House bill Wednesday that would require decisions to be made about offshore-drilling permits within 60 days. The vote took place hours after the Obama administration approved a proposal by Shell to drill five new exploratory deepwater oil wells in the Gulf of Mexico."
How light Exxon's tax burden is depends on how you count, reports Steven Mufson: "Just how much do big oil companies pay in taxes? Exxon Mobil says it pays plenty -- more in U.S. taxes than it earned in the United States last year. Not so, say critics of the oil industry; the Center for American Progress says the oil giant’s effective federal income tax rate is about half the 35 percent standard for U.S. companies. The liberal-leaning think tank, citing Exxon Mobil’s filings with the Securities and Exchange Commission, says the corporation didn’t pay any federal income tax in 2009. It all depends on how you count. Exxon Mobil counts everything -- not just federal income taxes, but also local property taxes, state taxes, gasoline taxes and payroll taxes. The Center for American Progress (CAP) and other analysts count only the company’s federal corporate income taxes."
The feds are making nuclear plants show their contingency plans, reports Ryan Tracy: "The U.S. Nuclear Regulatory Commission told the operators of nuclear plants Wednesday to provide information about their plans to respond to 'extreme events,' saying it would use the information as it reviews its safety regime after a nuclear crisis in Japan. The agency is conducting a wide-reaching review of its safety regulations following the release of radiation at Japan's Fukushima Daiichi plant and is scheduled to get its first briefing on that review Thursday. The agency Wednesday asked for detailed information about plans that companies were required to develop after the Sept. 11, 2001, terrorist attacks. The plans deal with the possibility that large areas of the plant would be lost during an emergency and detail how the operator would continue to keep nuclear reactors cool and prevent the release of radiation."
Closing credits: Wonkbook is compiled and produced with help from Dylan Matthews and Michelle Williams.