So How's That Grand Bargain Working Out?

03/13/2013 02:52 pm ET

Well, another day, another dollar of revenue that's not being exchanged for a dollar of entitlement cuts. As sequestration remains in effect, and people mainly obsess about the loss of White House tours, President Barack Obama has attempted to add a little bit of schmoozing to his arsenal of Grand Bargaining tactics, but there's been very little in the way of thawing between the two sides.

In a way, it's too bad that we aren't more fully on the way to a Grand Bargain, because then I could talk about just how badly you will get hosed in all of the Bargained-for Grandeur. (To get you started on that, please read this post from Alex Pareene, over at Salon.) In the meantime, we continue our chronicle of the Bargainers, and their relative sincerity, or lack thereof.

Today, Jim VandeHei and Mike Allen at Politico have done another one of those "Behind The Curtain" takes on the state of play, and hold on to your hats, because here's the breaking news: Republicans are unwilling to budge from their "no revenue never ever" stance, no matter what the White House is willing to offer. As the Politico twosome see it, the underlying issue is Obama's "tax problem." See, back during the fiscal cliff talks, Obama ended up winning the battle over the Bush-era tax rates -- an issue he campaigned on, and one that found favor with voters.

A popular tactic for pundits these days is to mull what might have happened if the White House had "gone over the fiscal cliff" and bargained from there, instead of wrapping up the Bush-era tax cut issue and punting the other areas of concern (sequestration, the debt ceiling, the budget) until now. VandeHei and Allen contend that Obama has "lost some leverage," and there is some truth to that. I largely agree with Matt Yglesias when he suggests that a few weeks of pain from the fiscal cliff being breached probably would have made it easier to resolve all these issues. We'll never know if that's true, of course, so save it for your fiscal crisis comic book retcons, I guess.

VandeHei and Allen suggest that now that he won the battle over the Bush-era tax cuts, Obama stands no chance of getting any additional revenue from the GOP (and it is all but implied here that he's got no right to ask). Beyond that, there are anecdotes from various Republicans, which are presented to allow readers to assay whether Obama is being an honest broker. House Majority Whip Kevin McCarthy (R-Calif.) complains that Obama is an aloof Blackberry reader with nothing but lectures. On the other hand, Sen. Rob Portman (R-Ohio) is still of the mind that Obama is being "sincere."

“Republicans should be willing to engage,” Portman said. “There’s an understandable skepticism, because the president has been on the campaign trail since the election. But my conversations with him and his staff indicate that they are interested in finding a way forward. The worst that could happen is we find out they’re not sincere.”

Meanwhile a statement from an unnamed White House official makes their position pretty clear: "The GOP has no chance at any of the entitlement reform they claim to want if they won’t compromise on revenues...That’s the only deal available to them.” Of course, the GOP will also be getting a ton of spending cuts in addition.

Here's how VandeHei and Allen depict Obama's "tax problem":

President Obama faces huge, and probably insurmountable, obstacles to reviving a grand bargain — none higher and more difficult to overcome than his decision to increase taxes by $600 billion in December.

At the time, Obama claimed victory, slapping new taxes on the rich while protecting George W. Bush’s cuts for everyone else. In retrospect, it looks more like a missed opportunity than a political or policy triumph.

They go on to note that now, the $600 billion in revenue extracted from that exchange might be all Obama gets, "a far cry from the $1.6 trillion he wants, or even the $1 trillion-plus many Republicans were discussing in previous grand bargain talks." Which isn't anything you haven't already heard.

I personally think that a deeper look behind the curtain is in order, because there are details being left out here. In the first place, let's remember why the debate over the Bush-era tax rates garnered such a paltry sum. Rather than get what he could have gotten (and indeed, what he campaigned on), which was a reset on the tax rates on incomes at $250,000 per year and above, Obama compromised and pushed the cut-off up to $400,000 a year. One can only speculate as to why Obama relented in the eleventh hour -- certainly, in terms of the second-term agenda he wants to enact, the move was essentially self-limiting -- but I'd posit that one reason is that knowing he'd ask for more revenue down the line, he wanted to make a good-faith demonstration that he was not "running up the score" on the other party to the negotiations.

But more importantly, let's remember that in terms of "additional revenues," the White House's goal isn't to continue to jack up tax rates. What they are asking for, in terms of revenue, is the very proposal that Mitt Romney and Paul Ryan put at the center of their campaign: ending tax breaks for special interests and closing loopholes. On top of that, the GOP is getting cuts to Medicare and chained CPI for Social Security. This is, by any definition, a very favorable deal to Republicans. As Pareene notes, "This is a compromise in which conservative policy is being offered in exchange for conservative support for a conservative policy."

Basically, Obama is offering both the cake and the chance to eat it, and Republicans are standing athwart a huge policy win and shouting, "Stop!"

This is where one truly has cause to question their sincerity. And perhaps we should just allow the scales to fall from our eyes and admit that even though the GOP spent an entire presidential campaign braying about the need to end tax breaks for special interests and close loopholes, that was all one big con. Over at Daily Intel, Jonathan Chait has already made up his mind on the matter:

The answer to this piece of the mystery is clear enough: Republicans in Congress never actually wanted to raise revenue by tax reform. The temporary support for tax reform was just a hand-wavy way of deflecting Obama’s popular campaign plan to expire the Bush tax cuts for the rich. Conservative economists in academia may care about the distinction between marginal tax rates and effective tax rates. But Republicans in Congress just want rich people to pay less, period. I can state this rule confidently because there is literally not a single example since 1990 of any meaningful bloc of Republicans defying it.

The weird way Republicans have abandoned their strenuously held position that tax reform is an acceptable avenue to revenue is perhaps the most under-reported and unremarked-upon aspect of the entire "Grand Bargain" debate. That's strange because it has much, much more to do with the current impasse than the resolution of the Bush-era tax rates. Since those tax rates were scheduled to sunset at the end of 2012, the rate increase on upper income levels became a fait accompli the minute Obama won the election. Flash forward to the here and now, and it's pretty clear that it's Republicans' refusal to continue to support their own tax reform policy that has caught the Obama administration flat-footed.

I can only speculate, but it seems to me that Republicans -- with the probable exception of the endlessly beleaguered John Boehner, who had the deal he wanted in his hands way back in 2011 -- has simply decided that putting the nation through an escalating series of high-stakes fiscal crises is preferable to taking the huge policy win the White House has gift-wrapped for them.

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