Why the Republicans Walked

Details are coming out about the deal the Republicans refused to discuss —

In essence, Van Hollen said, Republicans chose to “protect taxpayer subsidies for big oil companies, tax breaks for corporate jets, and tax breaks for millionaires.”

Democrats want to close tax loopholes that benefit oil companies, and eliminate a tax preference that gives corporate aircraft a friendlier depreciation schedule than commercial aircraft. Additionally, Van Hollen said, Democrats were proposing to phase out tax deductions and certain credits for people making more than $500,000 a year. These would be paired with a reduction in the tax burden on lower earners, by eliminating existing limitations on their deductions.

“Folks with over $500,000, we’re going to phase out your deductions and some of your tax credit,” Van Hollen said. … “The message Republicans sent was…unless we accept their lopsided approach…they’re prepared to tank the economy,” Van Hollen said.

Cantor retorted by babbling about broad tax rate hikes on individuals, small business, and employers, and anyone who believes that is a wingnut already. I’m sure the rate increases he’s talking about are the end of the Bush tax cuts for upper income earners, which would affect very few small businesses.

And John Boehner just released a press statement saying that a debt limit increase will not pass the House if it includes tax rate increases.

But House Republicans also let it be known that Cantor’s walkout was long planned. The timing of the walkout has been discussed for weeks. So, they admit they never were negotiating in good faith. Big surprise.

I want to hear the Dems say, fine; no more closed door discussions. Spell out publicly what they propose for revenue increases. Then, they’ve got to go out and make a real effort to tell the American people what’s at stake if the debt ceiling isn’t raised, because I still say large parts of them really don’t know.

Read more:

Steve Benen

Andy Kroll

Paul Krugman

Steve M.

8 thoughts on “Why the Republicans Walked

  1. Make the PUBLIC!

    Let the people see who’s proposing what.

    Transparency is a good thing.
    And it might keep Democrats from giving away the store – which is always a possibility, sorry to say.

  2. I’m not sure how this thing will play out in the end, so I’ doing a little speculating…

    If the debt ceiling is not removed and the USA finds itself unable to borrow more, it basically results in an automatic “balanced budget.” However, “balanced budget” can mean different things. About 1/3 of the federal budget is currently being borrowed, which means the other 2/3 of funds (from taxes) should continue to arrive in the Treasury (assuming the economy doesn’t collapse, which it might). Assuming best-case scenario where the economy doesn’t collapse, what exactly does the government do to reduce spending by 1/3 practically overnight? Will it just be an across-the-board cut – every social security check, Medicare payment, military spending, government workers salaries (including Congress) etc, all reduced by exactly 1/3? Or will it be an uneven cut – we spend the same on the military and eliminate social security and/or Medicare (that’s what the Republicans no doubt want).

    Or do we continue to pay for everything except debt service? That is to say, default the national debt – tough luck to everyone who holds Treasury Bills (that’s the banking system, pension funds, many foreign governments). That would result in a run on the banks. At least nobody would have to pay their mortgage anymore. But there would be a lot of pissed-off foreign countries who just might decide they longer want to trade with the USA (no Saudi oil, the shelves of Wal-Mart stripped bare of Made-in-China everything). Those survivalists living in the woods with their guns and canned goods may not look so foolish after all.

    It’s a big question what would happen to the value of the US dollar. Inflation or deflation? Experience shows that when most countries default on their national debt (USSR early 1990s, Argentina 2000, Zimbabwe right now), their currency collapses. The US dollar is supposed to be unique since most of the world’s trade is denominated in US dollars (oil, for example), but would that system remain in place with collapsing US banks? If the Saudis and everyone else no longer accepts dollars, they’ll move to another currency, or more likely a basket of currencies. Maybe gold, silver, possibly even copper will become a “currency” of sorts. Or we go to a barter system – a bushel or wheat for a barrel of oil (the East Bloc countries used to do that).

    With the USA collapsing, other super-powers step into the void. Welcome back USSR. China, maybe even India and Brazil. Don’t count out OPEC – the Saudis, Iranians, even Iraqis if they can get their act together, all in a position to decide the world’s future.

    I really don’t know if it will play out like that. As I said, all speculation on my part. This is an unprecedented event. Even in the depression of the 1930s, the situation wasn’t quite like this.

  3. I just hope whatever “compromises” are eventually made won’t be the sort that give the Republicans long-term policy committments in exchange for a set of short-term “concessions” that will be insubstantial by comparison. I am dumbfounded (not really, I know) by the failure to Democrats to present a unified front in exposing the Republicans’ ongoing wealth transfer program.

  4. Well, the stage is set for the big showdown…Big John is gonna clean up the town, and if Barry knows what’s good for him he better get out of Dodge. Great theater!

  5. Just yesterday I heard that tax loopholes cost the treasury about $1 trillion/year. Maybe legislators should appoint a commission to study tax loopholes with the goal of eliminating at least some of them? Surely you jest, Felicity.

  6. There’s something else on the horizon you don’t know about. In Sept/Oct the USPS will ‘run out of money’. That’s an oversimplification, since they have a steady stream of revenue. But that’s the point when the financial obligations will exceed the income from postage and the legal credit limit will max out.

    This event coincides with only the federal government hitting the limit if the debt ceiling is not raised. There has been talk for years about ‘privatizing’ the post office, which translates into selling the government assets, (vehicles, real estate, and equipment) for a pittance, banning the unions, slashing wages and benefits

  7. But most importantly, killing 600,000 government UNION jobs. If the debt ceiling is raised, and the refunding requirement for the USPS is eliminated, the USPS is in striking range of a break-even. This isn’t like permanently subsidizing the railroads.

    IMO, the man behind the curtain may be planning to keep the USPS in disparate need as an excuse to privatize. And the goal of privatizing is to break the biggest government unions. Getting the federal government in a vulnerable position is the excuse for the balanced budget amendment.

  8. “I want to hear the Dems say, fine; no more closed door discussions. Spell out publicly what they propose for revenue increases. ”

    I agree, but fat chance of that. Instead, the Democrats are allowing Republicans to run the show. Now Obama is talking privately with Bohner, even though he’s not the one they need to convince if they’re going to pass a bill through the House and avoid a filibuster in the Senate. Obama is making the situation worse, continuing to deal with them, drawing out the process as we get closer and closer to the deadline. The right thing to do would be to take a hard line now. Republicans are going to have to make a decision; far better now, than a day or two before default is expected to become a reality. Either that or I suppose we could just give them everything they want.

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