Watch The Baseline In Grand Bargain Talks

Moneybox
A blog about business and economics.
March 4 2012 8:46 PM

Watch The Baseline In Grand Bargain Talks

Erik Wasson reports that "A small, bipartisan group of lawmakers in both the House and Senate are secretly drafting deficit grand bargain legislation that cuts entitlements and raises new revenue."

See his piece for details on the bargaining. But see this blog post for the issue Wasson doesn't explore—the tax baseline. This is a crucially important matter. Right now, as a matter of existing law, taxes are scheduled to go up substantially in 2013 as a result of the expiration of the Bush tax cuts. That creates a large wedge between the revenues raised under current law (in which the Bush tax cuts expire) and the revenues raised under current policy (in which they are in effect). Barack Obama's stated position is that relative to that current law baseline he would like to enact a very large and somewhat regressive tax cut, known to political reporters as "the middle class tax cuts" from the Bush package. The Republican Party's stated position is that they will refuse to enact this very large and somewhat regressive tax cut unless Democrats also agree to tack on a smaller but still substantial tax cut that exclusively benefits high income individuals. On its face, this is a nonsensical position for Republicans to be taking. It means that if Obama is re-elected, Republicans will refuse to enact Obama's proposed tax cuts, federal revenue will sore, and then Obama will get to propose a whole new "Obama tax cut package" organized however he wants. This would put Republicans in a very awkward position. Alternatively, if Obama is re-elected the Republicans could simply cave to Obama's position and extend the "middle class" tax cuts while allowing the rich people only tax cuts to expire.

Advertisement

All that said, the question for any Grand Bargain proposal is "raises new revenue" compared to which baseline? If Obama agrees to cut spending merely in order to secure GOP acquiescence to a revenue figure higher than the current policy baseline, then he's giving away the store. Or, rather, the terms of the bargain aren't spending cuts for revenue increases, they're spending cuts in exchange for Obama getting a Grand Bipartisan Achievement. By contrast, if we're talking about cutting spending in exchange for revenues higher than the current law baseline, then the GOP is giving away the store. They'd be agreeing to raise taxes higher than even Obama favors! Which is all just to say that the details matter here a lot, and on the merits the state of the baselines means that I think there actually isn't very much to compromise over.

Matthew Yglesias is the executive editor of Vox and author of The Rent Is Too Damn High.

TODAY IN SLATE

Politics

Smash and Grab

Will competitive Senate contests in Kansas and South Dakota lead to more late-breaking races in future elections?

Stop Panicking. America Is Now in Very Good Shape to Respond to the Ebola Crisis.

The 2014 Kansas City Royals Show the Value of Building a Mediocre Baseball Team

The GOP Won’t Win Any Black Votes With Its New “Willie Horton” Ad

Sleater-Kinney Was Once America’s Best Rock Band

Can it be again?

Technocracy

Forget Oculus Rift

This $25 cardboard box turns your phone into an incredibly fun virtual reality experience.

One of Putin’s Favorite Oligarchs Wants to Start an Orthodox Christian Fox News

These Companies in Japan Are More Than 1,000 Years Old

Trending News Channel
Oct. 20 2014 6:17 PM Watch Flashes of Lightning Created in a Lab  
  News & Politics
Politics
Oct. 20 2014 8:14 PM You Should Be Optimistic About Ebola Don’t panic. Here are all the signs that the U.S. is containing the disease.
  Business
Moneybox
Oct. 20 2014 7:23 PM Chipotle’s Magical Burrito Empire Keeps Growing, Might Be Slowing
  Life
Outward
Oct. 20 2014 3:16 PM The Catholic Church Is Changing, and Celibate Gays Are Leading the Way
  Double X
The XX Factor
Oct. 20 2014 6:17 PM I Am 25. I Don't Work at Facebook. My Doctors Want Me to Freeze My Eggs.
  Slate Plus
Tv Club
Oct. 20 2014 7:15 AM The Slate Doctor Who Podcast: Episode 9 A spoiler-filled discussion of "Flatline."
  Arts
Brow Beat
Oct. 20 2014 9:13 PM The Smart, Talented, and Utterly Hilarious Leslie Jones Is SNL’s Newest Cast Member
  Technology
Technocracy
Oct. 20 2014 11:36 PM Forget Oculus Rift This $25 cardboard box turns your phone into an incredibly fun virtual-reality experience.
  Health & Science
Medical Examiner
Oct. 20 2014 11:46 AM Is Anybody Watching My Do-Gooding? The difference between being a hero and being an altruist.
  Sports
Sports Nut
Oct. 20 2014 5:09 PM Keepaway, on Three. Ready—Break! On his record-breaking touchdown pass, Peyton Manning couldn’t even leave the celebration to chance.