The supercommittee's failure was finalized yesterday, and so today is the day we figure out who to blame. President Obama was clear in his remarks last night: The gridlock was the Republicans' fault. Rep. Jeb Hensarling, the Republican co-chair of the supercommittee, is clear in the Wall Street Journal this morning: the Democrats deserve the blame. My colleague Michael Gerson, meanwhile, says it was Obama.
Hint: It's the one that named Sen. Max Baucus as one of its six key negotiators.
The final Boehner plan envisioned tax reform that would generate $800 billion in new revenues and bring the top rate down to 35 percent. In the supercommittee, the highest Republicans ever got on taxes was the Toomey plan's $300 billion, with envisioned a top rate of 28 percent. So on taxes, it's fairly clear: The supercommittee Republicans were far to the right of Boehner.
On the Democratic side, Obama eventually insisted on somewhere near $1.2 trillion in tax reform or, if the revenues were to move lower, on much less in entitlement cuts. In the supercommittee, the Democrats offered a plan (pdf) with less than a trillion dollars in tax reform -- and more entitlement reforms than Obama was willing to agree to.
Boehner had about $150 billion in Medicare beneficiary cuts in his opening bid in the negotiations with the president, and he went down from there. In the supercommittee, Baucus offered $200 billion in Medicare beneficiary cuts. Supercommittee Republicans were far beyond that, however. If you read Hensarling's op-ed today explaining why the committee failed, he complains that Democrats were too focused on tax increases but also that they refused to gut the Affordable Care Act or embrace "architectural changes" like turning Medicare into a premium-support system. You can support those policies or oppose them. They're not exactly compromise plans, however.
Frankly, it's hard to find even one area in which supercommittee Republicans offered a substantially new compromise -- or even matched what Boehner offered Obama. Which perhaps makes sense. A Pew poll (pdf) earlier this month asked whether, "on the federal deficit, lawmakers who share your views should stand by principles, even if no progress is made," or "be willing to compromise, even if it means a deal you disagree with." Among Democrats, 74 percent chose compromise. Among independents, 67 percent chose compromise. Among Republicans, only 52 percent chose compromise. And the 38 percent who chose principles amassed a pretty good record in 2010 of primarying politicians who betrayed them.
One can argue whether the supercommittee truly failed. Perhaps you like the trigger and August's discretionary cuts, or you think it would be better to address the deficit problem after the next election. But if the question is whether the Democrats or the Republicans moved further in the direction of a compromise, there's no doubt that compared to the last set of negotiations, the Democrats moved right and the Republicans moved further right.
1) The supercommittee's failure occurred in talks between Reid and Boehner, report Jake Sherman, Manu Raju, and John Bresnahan: "It was Friday afternoon when chances to reach a deal by the moribund supercommittee fell to two of the most important men on Capitol Hill not elected to Congress -- David Krone and Barry Jackson. Krone, Senate Majority Leader Harry Reid’s (D-Nev.) chief of staff, and Jackson, the top aide to Speaker John Boehner (R-Ohio), had been quietly deputized to find a last-ditch deal and avert yet another failure of Congress’s own making...But moments after Krone rejected one of Jackson’s proposals over the issue of taxes, details of the negotiations leaked to the press. Krone and the Senate Democrats were furious, the talks blew up and, in effect, so did the supercommittee."
2) Republicans are vowing to undo the debt deal's Pentagon cuts, reports Charles Hoskinson: "Republican lawmakers moved quickly Monday to protect the Pentagon from automatic budget cuts that will be triggered by the supercommittee’s failure, with the chairman of the House Armed Services Committee saying he’ll soon introduce legislation to repeal them. Rep. Buck McKeon (R-Calif.) vowed to eliminate the automatic cuts, which would take effect in 2013, citing dire warnings from his panel’s analysts and Defense Secretary Leon Panetta about the impact of an additional $500 billion reduction on the nation’s security...President Barack Obama later said he would veto any attempt to undo the spending cuts. 'There will be no easy off-ramps on this one. We need to keep the pressure up to compromise, not turn off the pressure,' he said."
3) Supercommittee failure puts the payroll tax cut in jeopardy, reports Jia Lynn Yang: "The failure of the 'supercommittee' raises the chance that working Americans will see their paychecks cut in January, and many economists say that could weaken an already vulnerable U.S. economy. Last year’s payroll tax cut saved the average U.S. household more than $900, according to the Tax Policy Center. But because the supercommittee could not agree on a budget plan, the tax cut, as well as unemployment benefits, could expire at the end of the year...Estimates vary on the extent that growth in the gross domestic product could suffer. Goldman Sachs economic forecaster Alec Phillips estimated that allowing the payroll tax cut to expire would reduce growth by as much as two-thirds of a percentage point in early 2012. Macroeconomic Advisers estimates that it would reduce GDP growth by 0.5 percent."
4) The trigger will hit domestic spending very hard, reports Brad Plumer: "Third Way has provided examples of what would happen if the the trigger’s 7.8 percent cuts were spread evenly, across the board, in 2013. We’d have 608 fewer food-safety inspectors, which would likely lead to some 49,000 more cases of Salmonella, E. coli, and other food-related diseases. We’d have 1,200 fewer FAA air-traffic controllers, which could lead to an estimated 205,527 more flight delays. There’d be 2,326 fewer IRS agents, which would likely lead to $4.5 billion less in tax revenue collected. Indeed, the IRS example illustrates why many observers (see David Leonhardt here) think that cutting domestic spending is so short-sighted -- and could, in some cases, worsen our deficit problems down the way...Gutting the IRS makes tax evasion easier, which means less revenue coming in."
1) The idea that 47% of Americans pay no taxes is a pernicious myth, writes Ramesh Ponnuru: "That 47 percent of all tax filers have no income-tax liability is now one of the most widely known statistics on the right...Most of the people included in that figure do make financial contributions to the federal government, and there is no reason to think that nonpayment of income taxes is turning millions of Americans liberal. The bad news is that worrying too much about this number will lead conservatives down an intellectual and political dead end...Conservatives cannot really believe that it was a flaw in America’s founding that nobody paid income taxes to the federal government for almost all of the country’s history before the welfare state."
2) The supercommittee's failure is Obama's fault, writes Michael Gerson: "Budget deals get done because presidents prod, plead, cajole, demand and threaten. A few phone calls and tepid public statements do not count. It is the executive, not the legislature, that gives the budget process energy and direction. The supercommittee failed primarily because President Obama gave a shrug...Obama’s strategy depends on a difficult communications task. He is attempting to run against the failures of a political process he is supposed to lead. He wants to campaign against the brokenness of a system he was hired to repair. His critique is a confession of ineffectiveness. Obama’s main self-justification could be turned into an argument against extending his tenure -- that he is simply in over his head."
3) Occupy Wall Street started with a small group of radical writers, writes Mattathias Schwartz: "This is how Occupy Wall Street began: as one of many half-formed plans circulating through conversations between Lasn and White, who lives in Berkeley and has not seen Lasn in person for more than four years. Neither can recall who first had the idea of trying to take over lower Manhattan. In early June, Adbusters sent an e-mail to subscribers stating that 'America needs its own Tahrir.' The next day, White wrote to Lasn that he was 'very excited about the Occupy Wall Street meme...I think we should make this happen.' He proposed three possible Web sites: OccupyWallStreet.org, AcampadaWallStreet.org, and TakeWallStreet.org. 'No. 1 is best,' Lasn replied, on June 9th. That evening, he registered OccupyWallStreet.org."
4) The Supreme Court will vote to uphold health reform if it cares about precedent, write Michael Bailey and Forrest Maltzman: "Based on preferences alone, 5 justices, including the 'swing' justice Anthony Kennedy, are predicted to vote to overturn the PPACA....The most likely scenario is a 5-4 decision overturning the PPACA. Under this scenario, the Court would be a lock to overturn. Goodbye Obamacare...But consider a second scenario. We (and many others) think there is more to justices’ behavior than policy preferences. Justices have famously bucked their presumed policy preferences on high-profile cases...Kennedy’s predicted behavior shifts dramatically, going from a certain vote to overturn the PPACA in the ideology-only model to only a 46% likelihood of voting to overturn when we factor in precedent...As always, predictions are hard, especially about the future...That said, here is ours: 6-3 or 7-2 to uphold the law."
Maryland rock interlude: Wye Oak play an acoustic version of "Civilian".
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Still to come: Pressure for Eurobonds is increasing; Obama has signed a health reform "fix"; we could still get a farm bill out of the supercommittee process; the EPA is delaying a greenhouse gas rule; and kitten wrestling.
Pressure for Eurobonds is increasing, reports Michael Birnbaum: "As strategies to solve Europe’s financial woes have flopped one after another, a top European Union official called for bigger weapons Monday, proposing that countries be able to borrow money backed by the entire euro zone. The suggestion, quickly brushed away by Germany, deepens the rift between the continent’s industrial powerhouse and a growing chorus of leaders who are calling, in essence, for Berlin to be more generous. Any solution to Europe’s crisis will have to come with Germany’s backing, since that country’s good credit would be propping up its neighbors...Letting countries borrow against the credit of the European Union 'makes sense' if they are forced to abide by strict financial guidelines as a condition, European Commission President Jose Manuel Barroso said at a news conference in Brussels on Monday."
The government is growing more entangled in the housing market, reports Zachary Goldfarb: "It’s a rare area of agreement between Republicans and the Obama administration: The government should reduce its outsize role in making sure that people can buy homes. And yet, in the past three months, these officials and others in Washington have taken steps that expand the government’s support of the housing market. The reason is that the economy and the housing market, in particular, remain weak. Officials are worried that withdrawing government support for housing could make it more difficult for people to buy homes, reducing demand and sending housing prices even lower...The moves are making the mortgage system more reliant on the federal government -- and thus harder to wean from Washington’s help -- contrary to the stated wishes of both the administration and Republicans."
More redistribution would threaten what makes America special, writes Edward Glaeser: "The victory of the left in Europe, and its far more limited success in the U.S., have led to powerful differences in worldviews. In our book, we reported that 60 percent of Americans believe that the poor are lazy, a view shared by only 26 percent of Europeans. Hard facts don’t explain this difference in beliefs, for the American poor typically work harder than their European counterparts, though they tend to work shorter hours than more prosperous Americans. We reported that only 30 percent of Americans believed that luck determines income, and 54 percent of Europeans had that opinion...A radically more redistributive state, resembling the one championed by the Occupy Wall Street movement, would damage the entrepreneurial spirit that has, for so long, been such an exceptional American strength."
A lot of "charitable giving" isn't going to real charities, writes Ray Madoff: "More and more charitable dollars are now being directed to what are called 'donor-advised funds.' Many of these funds are affiliated with large financial institutions like Fidelity, Schwab and Goldman Sachs, and hold, invest and eventually distribute dollars for charitable purposes. In the meantime, they generate significant management and investment fees for the institutions that house them, which have little incentive to speed up the distribution of resources to the charitable sector. Most important, there is no payout obligation; while donors receive the tax deduction as soon as they make their contribution, their money can languish in these charitable holding pens for decades or even centuries."
Adorable animals doing adorable stuff interlude: A kitten pets his owner's head.
Obama signed a "fix" of health reform's Medicaid provisions into law, reports Julian Pecquet: "President Obama on Monday signed into law legislation making it harder for people to qualify for Medicaid and insurance subsidies under the healthcare reform law. Republicans pounced on the provision after discovering that the law would have let some middle-income people qualify for Medicaid because it didn't count Social Security earnings when determining eligibility. Legislation to change the income definition passed with strong bipartisan support in both chambers. Advocates for people with disabilities however criticized the change. Some 1.8 million people who receive Social Security disability payments are stuck in a two-year waiting period before they can qualify for Medicare, and many of them would have been eligible for Medicaid under the original income definition."
The economic downturn is reducing the growth of health spending, reports Lester Feder: "The economic slump has put the brakes on health spending, which may bolster a conservative truism: When consumers become more sensitive to the cost of health care, they cut back. Or maybe it supports a progressive one: Forcing consumers to have more 'skin in the game' means they will cut back on needed care, not just elective or unnecessary care. And neither side can tell for sure yet whether people have changed spending patterns for good or just postponed seeing doctors or getting tests or treatment until the economy improves or they get too sick to wait any longer...The annual rate for health spending growth was 6 percent in late 2007, according to the Altarum Institute. By 2009, the growth rate had bottomed out at around 3.5 percent."
The administration is using its power to condemn rate increases for the first time, reports Louise Radnofsky: "The Obama administration publicly called out an insurance company for making what it deemed an 'unreasonable' increase in health premiums--its first use of a new power received under the health-care overhaul passed last year. The Department of Health and Human Services said it examined Everence Insurance of Pennsylvania's 11.6% average increase for small group plans, and found it to be excessive... The health-care law gave the federal government and the states the power to review rate increases of 10% or more, starting in September. The federal government carries out the review for states whose insurance regulator doesn't have the authority to prevent the increase."
Medicare shouldn't be paying for ineffective cancer drugs, writes Joe Nocera: "Dr. Margaret Hamburg, the F.D.A. commissioner, affirmed the decision on Friday in a ruling that would seem, on its face, unassailable. She essentially said that F.D.A. decisions had to be driven by science, and the science wasn’t there to support Genentech’s desire to market Avastin as a breast cancer drug...The strangest reaction, though, has come from the nation’s health insurers and the administrators of Medicare. Despite the clear evidence of Avastin’s lack of efficacy in treating breast cancer, they have mostly agreed to continue paying whenever doctors prescribe it 'off label' for breast cancer patients. Avastin, by the way, costs nearly $90,000 a year...If we’re not willing to say no to a drug like Avastin, then what drug will we say no to?"
We could get a farm bill out of the wreckage of the supercommittee, reports David Rogers: "Left at the barn door, farm bill negotiators must now decide what can be salvaged from the supercommittee’s wreckage as they shift their focus toward producing their own stand-alone legislation before the current authorization bill expires next September...The weeks of backroom negotiations could prove valuable still as a first Washington exercise in the need for change in agriculture policy. What emerged was a broad consensus that the current system of direct cash payments to producers -- costing $5 billion a year -- can no longer be defended. Government support for farmers should be a function of real planted acres, not outdated data measuring a producer’s 'base' acreage from years ago. And tighter payment limits of $105,000 are proposed for new safety net programs."
Newt Gingrich is backing Social Security privatization, report Patrick O'Connor and Jonathan Weisman: "Presidential candidate Newt Gingrich said on Monday that younger workers should be allowed to divert a portion of their Social Security taxes to private investment accounts, leaving Mitt Romney as the only leading GOP contender not to advocate fundamental changes to the federal retirement program. Younger workers also could opt to remain in the current Social Security system under Mr. Gingrich's plan...Mr. Gingrich's proposal...is similar to an unsuccessful effort by former President George W. Bush to revamp the popular retirement program for seniors. But Mr. Gingrich said his proposal would guarantee that anyone who invested in personal savings accounts would receive as much as traditional Social Security pays out."
Even more adorable animals doing adorable stuff interlude: Kitten wrestling.
The EPA is delaying its refinery greenhouse gas rule, reports Ben Geman: "The Environmental Protection Agency will not meet a mid-December deadline to propose first-time standards for greenhouse gas emissions from oil refineries. Draft rules had been slated to surface in the middle of next month under a settlement with environmentalists and other parties, but EPA says it needs more time. 'EPA expects to need more time to complete work on greenhouse gas pollution standards for oil refineries, and is working with the litigants to develop a new schedule to replace the current date of mid-December for a rule proposal,' the agency said in a statement Monday. Reuters reported earlier Monday that a delay was likely. EPA has already missed deadlines earlier this year to propose greenhouse gas standards for power plants."
China could retaliate against the US on solar panels, reports Keith Bradsher: "Chinese solar panel makers plan to shift some of their production to South Korea, Taiwan and the United States in hopes of defusing a trade case pending against them in Washington, according to industry executives. But at the same time, the Chinese industry is considering retaliating by filing a trade case of its own with China’s Commerce Ministry. The most likely target would be American exports to China of polysilicon -- a prime ingredient in solar panels -- Chinese industry executives and officials said on Monday. American manufacturers exported about $873 million of polysilicon to China last year, nearly as much in dollar terms as the value of the solar panels that China shipped to the United States."
Wonkbook is compiled and produced with help from Dylan Matthews and Michelle Williams.