In this November 16, 2012, file photo, President Barack Obama acknowledges House Speaker John Boehner of Ohio while speaking to reporters in the Roosevelt Room of the White House in Washington, as he hosted a meeting of the bipartisan, bicameral leadership of Congress to discuss the deficit and economy. A big coalition of business groups says there must be give-and-take in the negotiations to avoid the "fiscal cliff" of massive tax hikes and spending cuts. But the coalition also says raising tax rates is out of the question. The group doesn’t care that President Barack Obama campaigned to raise tax rates on the rich.
As we head into negotiations on the Austerity Trap (better known by the inaccurate moniker "fiscal cliff," which I refuse to use), there's a clear narrative emerging. This narrative has it that Democrats want to see taxes increase on rich people, which Republicans aren't happy about, while Republicans want to see entitlement "reform," which Democrats aren't happy about. So once everybody gives a little, and Republicans accept some tax increases for the rich while Democrats accept some "reform" of Social Security and Medicare, then we can have a happy ending.
The problem with this is that while the Democrats' position is quite clear—the Bush tax cuts should expire for income over $250,000—the Republicans' position is extremely vague, on both the tax side and the entitlement side. Let's take taxes first. A bunch of Republicans are being praised for their willingness to violate Grover Norquist's pledge to Never Raise Taxes In Any Way Ever Never Ever. Yet they're remaining steadfast that tax rates must stay the same, while allowing that maybe we can trim some deductions for the wealthy. As Steve Benen points out, some are acting like these Republicans are being generous for essentially taking the position that they support Mitt Romney's tax plan. Perhaps they're assuming that the wealthy will be able to cleverly evade any limitation on deductions, so it won't make a difference to their primary constituency. But in any case, we haven't heard them take a specific position. Are they proposing a hard cap on all deductions? Eliminating certain deductions while keeping others? We don't yet know.
Then we get to the price Republicans are going to want to exact for any agreement to stop the Austerity Trap, and this is where they're vague. They want "reform" of entitlements. What is "reform," you ask? Well, nobody ever says. The reason is that Republicans know perfectly well that the things they would like to do to Social Security and Medicare are unpopular. We can dispense with Social Security quickly: The program is basically fine, and you could eliminate future shortfalls in benefits with some minor tweaking of the financing, like raising the income cut-off for Social Security taxes, which is currently at $110,100. But the real budgetary challenge is Medicare.
You may remember that when Paul Ryan joined the Republican ticket, a lot of attention was paid to his Medicare plan, which would essentially turn Medicare from an insurance program into a voucher program, in which seniors would try to find affordable insurance coverage from private insurance companies. You may also remember that he and Romney quickly stopped talking about it and turned to accusing Barack Obama of cutting Medicare by $716 billion, heartless enemy of the welfare state that he is. This should remind us of two things: First, the "reform" that Republicans want in Medicare is to privatize it and end its guarantee of health coverage; and second, that only one party has reformed Medicare. That reform, also known as Obamacare, not only found hundreds of billions of dollars in savings but also moved toward changing the payment structure (away from fee-for-service and toward rewarding providers for making and keeping patients healthy) and included a lot of pilot programs that could reduce costs in the future.
This debate is just getting started, so perhaps it's not so terrible that Republicans have been so unclear about what specifically they want. But they shouldn't be allowed to get away with it for long. Let's also not forget that we had something of a referendum on all these questions earlier this month. Barack Obama couldn't have been clearer that he wanted to raise taxes on the wealthy and didn't want to voucherize Medicare. And he won.
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