The case for the Dems’ negotiating strategy

[babylonsister]

http://www.washingtonpost.com/blogs/plum-line/wp/2012/12/31/the-case-for-the-dems-negotiating-strategy/


The case for the Dems’ negotiating strategy

Posted by Greg Sargent on December 31, 2012 at 12:23 pm


The White House and Dems are taking heavy criticism this morning for giving more ground towards Republicans in the fiscal cliff talks. Dems have offered to raise the income threshold to $450,000 and to keep the estate tax threshold at $5 million, in exchange for an increase in unemployment benefits but no additional stimulus spending. This is being widely denounced on Twitter and elsewhere as squandering Dem leverage.

The view of the situation taken by White House and Dem negotiators, however, is at least worth thinking about.

A White House ally spells out an alternative interpretation. Dems don’t necessarily believe going over the cliff will give them all that much more leverage in the talks next year. It’s been widely argued (by me and many others) that if we do go over the cliff, Dems can simply move to pass the Obama Tax Cuts For The Middle Class, forcing House Republicans to go along. But some Dems question whether House Republicans will feel the need to follow this script. Rather, the thinking goes, if Dems do that next year, the House GOP leadership can pass its own bill cutting taxes on all income up to, say, $500,000 or $600,000.

If the idea is that it’s easier for Republicans to support continuing tax cuts just on some income levels after they’ve all expired, such a bill (with $500,000 or $600,000 as the threshold) could pass the House. What’s more, some Congressional Democrats may feel like they have to support such a bill, too. And the worry is that if this is then kicked over to the Senate, then some Senate Dems may feel tempted to support it or at least negotiate around it, which could divide Senate Dems. After all, some of them have already voiced support for putting the income threshold at $500,000 or $1 million.

And so, the idea is that it’s better to lock in a deal on rates now, at, say, $450,000, extend unemployment benefits, and pocket those gains and continue the fight next year. Raising the income threshold is obviously not desirable, but Dems will have broken the decades-long GOP opposition to raising tax rates on the rich, pocketed hundreds of billions in revenues, made the tax code more progressive, and extended unemployment benefits — all without agreeing to any spending cuts yet.

snip//

But it’s worth at least entertaining the possibility that the current posture the White House and Dems have adopted may be guided by an actual overarching strategy and game plan, and represents more than just a feckless cave, as many are suggesting.

[Lionessa]

1. Okay, I can see some strategy there, I'll NOT call this a cave.

For a change.

[Wellstone ruled]

2. This whole thing boils down to this,

McTurttle will not give in to a Black Man. This S.O.B is just another super Racist,answering to his racist base. It's always has been the Race Card with the Rethugs an nothing else. When chickenshit McTurttle asked for Biden,that alone proved me right. Enough of this Dog and Pony Show lets call this POS out right now.

[alcibiades_mystery]

3. I'm mystified by people calling this deal a cave

I'd prefer $388,500 to be the line in the sand on rate increases.

That said, the deal apparently includes a 20% rate on capital gains (including dividends) for those making over $250,000. The increased rate on dividends really does offset the move from $250,000 to $450,000 a bit - drawing additional revenues from the top 2% of the population where the rate line at $450,000 or $500,000 and no other revenues would not. Obviously would like to have estate as well, but both these features maintain the principle that the very wealthy should pay more.

If we review the Republican position, we see how eroded their defense is:

1) They insisted on no tax RATE increase PERIOD. They would find revenue other ways. They abandoned this position.

2) Having abandoned the "No rate Increase" position, they tried to set the rate at $1,000,000 or greater in income, and no other changes. This position, too, has fallen.

3) There was a HuffPo story this weekend that suggested the new Republican position was $500,000. Apparently, it is $550,000, but they might accept a capital gains increase alongside that.

When you look at where they started, you really see how far they've fallen. meanwhile, the Dem position started at yes on rates, and Rate at $250,000, and has apparently moved up to $450,000. That means no tax rate increases on the middle class, and only a slight movement up in brackets. Moreover, when a capital gains rate is included in the rate changes, you draw revenue from top incomes at roughly the level you would if the rate was something like $350,000, so the actual uptick is even more slight. The rate is a way for GOPers to save face. The capital gains increase may actually offset the income rate completely back down to $250,000.

[babylonsister]

4. I'm mystified also, which is why I was happy to see this from Greg. nt

[backscatter712]

6. Also, the GOP's caved on Chained CPI.

That's no longer on the table. Don't tell me we're giving away the store.

http://www.dailykos.com/story/2012/12/30/1174894/-Senator-John-McCain-says-GOP-chained-CPI-off-the-table-Democrats-hang-tough

[alcibiades_mystery]

7. Yes, two weeks ago the GOP would not give on ANY of this without "entitlement" cuts

They've even shelved that.

To call this a cave is baffling.

[Sekhmets Daughter]

5. Increasing taxes for those earning

over $200K unmarried or $250K married couple would raise $750 billion over 10 years. $75 billion is about 8 days of federal government spending. The entire fiscal cliff debate is an absurdity. Those earning $200K or above comprise 3% of the population. We have 47% who don't have enough income to pay any federal income tax. The heart of the problem is not that taxes are too low, or spending is too high...it's that not enough Americans earn good wages. 'Income inequality' seems to be an empty phrase as no one is proposing anything to address the problem. The "cut taxes, no cut spending" debate is simply a diversion from the true problem. Because no one is going to address the issue of underpaid workers, Americans are going to have to decide whether they want to pay more taxes or have fewer services, neither of which is a particularly desirable outcome.

[bama_blue_dot]

8. One thing I cannot understand

is why the President ruled out invoking the 14th Ammendment over the debt ceiling.. Clinton was the one who first brought that up last year.. We all know in a couple months this whole fight will be much worse than this.. I don't see the President getting around it without giving in on benefit cuts..