Conservative> Debra Saunders> The Folly In Obama S Grand Bargain

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The Folly in Obama's 'Grand Bargain'

Here is what I do not understand: President Barack Obama is acutely aware of what will happen if Congress fails to raise the government's $14.3 trillion debt ceiling. As he told the nation Monday, if Washington does not raise the debt ceiling by Aug. 2, rating agencies are expected to downgrade the government's AAA credit rating, and interest rates will rise for everyone. The fallout could spark "a deep economic crisis."

So why did Obama choose this moment to demand fiscal reform in Washington? When bipartisan commission heads Democrat Erskine Bowles and Republican Alan Simpson proposed a $4 trillion debt reduction package, Obama could have embraced the plan or supported it with changes, without putting the full faith and credit of the nation on the line. But he rejected the proposal. So why is he pushing for a $4 trillion deal now — when failure to win it would put the U.S. economy at greater risk?

Why is the president demanding that Republicans agree to tax increases when he knows that tax increases are the poison pill that kills a crucial deal?

Senate Majority Leader Harry Reid has proposed a cynical but useful plan that would raise the debt ceiling and cut spending without raising taxes. Why didn't the president do this? If he shaved the tax increases out of his "grand bargain," the package likely would pass both houses of Congress, and Obama could declare victory and push the rest of his package as he campaigns for re-election.

When Obama and House Speaker John Boehner reportedly were close to a deal, why did Obama throw $400 billion in additional tax increases on top of $800 billion proposed earlier? The New York Times editorialized that Republicans were wrong to reject the deal over "a paltry $400 billion" after praising the president's post-broken-talks news conference, at which he "radiated a righteous fury." From this chair, $400 billion is a big chunk of change.

And anyone who makes an impossible bargain more impossible looks like a man who doesn't know how to take yes for an answer.

Why won't the White House release a plan in writing? Spokesman Jay Carney told reporters that the White House has "shown a lot of leg" on negotiations. But the pro-transparency administration has not put out a plan so that voters could scrutinize it.

Would Democrats even have signed on to Obama's "grand bargain"? Reid clearly is willing to pass a package without tax increases. Sen. Ben Nelson, D-Neb., said he opposes a deal with a tax increase, and Virginian Jim Webb has voiced reservations, as well. On the party's far left, House Minority Leader Nancy Pelosi has bristled at the deal's reported cuts in entitlement spending. Though Obama has complained about Republicans for leaving him at the altar, it's not clear he had a wedding party.

Who gets hurt? Democratic partisans happily blame recalcitrant Republicans who won't compromise, while they ignore Obama's refusal to back down from a bad plan that can't happen.

On Monday, the president complained that "it's not fair" if a debt ceiling deal doesn't close corporate-jet loopholes but reduces funding for education and clean energy. Will it be fair to working families and American homeowners if the U.S. economy falters again?

Email Debra J. Saunders at dsaunders@sfchronicle.com. To find out more about Debra J. Saunders and read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate Web page at www.creators.com.

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Maybe the president is just plain stuck on the concept that you can't cut out revenue growth in any coherent plan to avoid insolvency, at least when revenue growth is an option, which clearly is the case here in the not yet poor, but clearly on the way, grand old U.S. of A.

If you say revenue growth, i.e., tax increase, is not an option, you are just taking part in the fiction of the tea party politics around this issue. Making the debt ceiling an issue in deciding about debt versus revenue is a dirt crap way of playing chicken with the fiscal standing of the United States in the world.

You know that. Perhaps you have not considered what this might do to the standing of the U.S. dollar as the currency of the world. There has already been damage done.

Think about learning how to convert the U.S. dollar to the Chinese yuan every time you buy something. That is what your tea party friends are driving us toward.

Nice work.

Comment: #1
Posted by: Masako
Sat Jul 30, 2011 7:18 PM

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A tax increase does not necessarily translate into a predictable revenue enhancement. Targeted tax increases skew economic activity, which alters the equation. Remember the luxury boat tax of some years back? It raised practically no revenue in itself and lost a good part of what the domestic boat business had paid in taxes. What it actually did is to send the big boat buyers offshore and killed their previous suppliers in the US. The problem in "taxing the rich" is that those taxpayers have economic alternatives to what is being taxed, which is why they already pay a surprisingly small proportion of the total taxes. In other words, it ain't that simple.

Comment: #2
Posted by: partsmom
Sun Jul 31, 2011 9:23 AM

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