President Obama presented his fiscal cliff proposal to Republicans Thursday, calling for $1.6 trillion in new taxes, $50 billion in new spending to bolster the economy, and an elimination of the debt ceiling as we know it. In the way of capitulation, Obama’s first proposal offers exactly nothing.
Whether or not the president is taking his bargaining cues from Michael Corleone is still being determined.
For film buffs out there, Mr. Obama’s offer recalls Don Corleone’s offer to fictional Nevada Sen. Pat Geary in The Godfather Part II, in which Geary demands that Corleone pay him off for a gaming license. Corleone, stony and aloof, responds, “My offer is this: nothing. Not even the fee for the gaming license, which I would appreciate if you would put up personally.”
In this metaphor, Sen. Geary is John Boehner. And the fee for the gaming license is the federal debt limit.
Most of Obama’s proposal is nothing new. Several pieces, such as the expiration of tax cuts on the richest 2%, have been hashed out in the campaign and since. “This should not be news to anyone on Capitol Hill,” said White House Press Secretary Jay Carney on Friday, in a decidedly abrasive tone. “It is certainly not news to anyone in America who was not in a coma during the campaign season.”
The White House proposal seeks to trim the deficit by $4 trillion over a decade. One trillion of that will come from the expiration of the Bush tax cuts on the wealthiest. Obama also wants dividends to be taxed as normal income, and the estate tax to rise from 15 to 45 percent, which it is already scheduled to do if no action is taken.
Entitlements, a contentious point for Democrats and Republicans alike, will see about $350 billion in savings from the president’s plan, mostly coming from Medicare. The details of these cuts would be decided by policymakers in 2013.
The real surprise in all of this is the the White House’s proposal to give the president unilateral power to raise the debt ceiling, barring a two-thirds opposition from Congress. An even greater surprise might be that this policy was originally proposed by Senate Minority Leader Mitch McConnell.
“The effect of this policy would, in general, be to finish off the debt ceiling,” wrote Ezra Klein on his Wonkblog Friday. “Republicans are laughing this off as a ridiculous, pie-in-the-sky proposal. But it’s actually a great idea—one that could do more to protect our economy than anything else in the debt deal. Even better, it would cost us nothing. Measured by its cost-effectiveness, it’s perhaps the best idea in American politics today.”
The president’s opening bid is bold. And though it may owe some debt to the Godfather, it’s certainly an offer Republicans can refuse.