Sunday, July 10, 2011

Update on Republican goals in debt ceiling talks

It appears that John Boehner wants to bring the debt ceiling talks regarding spending cuts from $4 trillion to $2 trillion. If you're like me, at first glance that looks odd. Republicans claim to be about reducing spending. So why would Boehner chose to lower the amount the deal cuts in half? Matt Yglesias has the answer:

The nature of legislative compromise, after all, is that you accommodate someone else’s objectives in order to obtain your objectives. A movement that actually believed that reducing federal spending was extremely important would, it seems to me, be quite willing to make concessions in order to obtain large quantities of spending cuts. Viewed in that light, it’s not obvious to me that backing away from a $4 trillion deal primarily composed of spending cuts constitutes a “more conservative” option than saying yes. You’re seeing that very little has changed in practice from the Bush years, when the GOP agenda consisted of aggressive tax cutting made palatable by refusing to pair the cuts with spending reductions. Now, ostensibly, cutting spending is the order of the day. But the bargaining strategy is entirely built around a tax-focused goal rather than a spending-focused one.

So the $4 trillion was what Republicans wanted. But Obama and the Democrats would only accept that if it came with revenue increases, in other words, tax increases or the closing of loopholes. I wrote a post a few days ago trying to sort out what the real goal of Republicans were. I said that while they want to cut or end entitlements, they also really like tax cuts and not having to raise taxes. This move by Boehner seems to confirm that (though as Jonathan Bernstein points out, we should take all news regarding negotiations like this with a grain of salt).

Like I said, Republicans presumably had the chance to significantly cut entitlement spending, just like they did during much of the Bush presidency. Yet because they like tax cuts so much, the highest ranking Republican is probably calling for fewer cuts in entitlements in the hopes of not raising taxes. We shall see what the final result is. But if Republicans manage to get a deal that includes no or even minor entitlement cuts in favor of no or even minor revenue increases we will have a pretty clear picture of their goals, of which cutting taxes is their top priority.

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