The Eve of the Eve

Some days are inherently unsatisfactory. In fact, there’s not even a name for them, like the eve of New Year’s Eve, the day before that odd day that ends in all the parties and that business in Times Square. The day before that day is just another day – nothing long and troubling ends and nothing new and hopeful begins. It’s just more of the same. No one carefully catalogs their regrets and then makes bold resolutions about how things will be different from here on out – those vows about losing weight and spending more time with the kids and putting some money, real money, away for the future, and about doing the right thing this time and not compromising on anything, or at least anything important. That’s for the morning after the parties, the morning of hangovers and regrets. The eve of the eve is for bumbling along, as usual, putting one foot in front of the other, as usual, doing what you always do, for no particular reason. It’s a nothing day. Expect nothing.

This year in Washington it was going to be different. This the eve of New Year’s Eve fell on a Sunday and the Senate had called itself in session to work out some way of going over that fiscal cliff the moment after that ball fell in Times Square. Obama, who had cut his Christmas vacation short to fly back and try one more time to work things out, had met with Congressional leaders on Friday, to see what could be done. He and Joe Biden sat down to hash things out with John Boehner, who sort of speaks for the Republican majority in the House, and Nancy Pelosi, who speaks for the minority there, and Harry Reid, who speaks for the majority in the Senate, and Mitch McConnell who leads the minority Republicans there. Hopes were high, but nothing came of it.

Obama was visibly exasperated – even if he said he was modestly optimistic. He told Reid and McConnell to work something out, right now. There was no mention of John Boehner. He’s useless. He can’t even get his own caucus in line. The guys on the Senate side can come up with something – each actually said that was possible. It may die in the House – Boehner’s wild Tea Party folks may demand that whatever the Senate comes up with not be allowed to come to the floor of the House at all. They could force Boehner to table this hypothetical save-the-nation compromise, but at least this was something. So it would be a rare Sunday session for the Senate, convening in late morning, after a night of furious late night negotiations, with a vote on something – anything – to take place late in the day.

It never happened. It was the wrong day. It wasn’t New Year’s Eve after all, just that useless eve of the eve, a matter of bumbling along as usual:

Senate leaders on Sunday failed to produce a fiscal deal with just hours to go before large tax increases and spending cuts were to begin taking effect on New Year’s Day, despite a round of volatile negotiations over the weekend and an attempt by Vice President Joseph R. Biden Jr. to intervene.

In seesaw negotiations, the two sides got closer on the central issue of how to define the wealthy taxpayers who would be required to pay more once the Bush-era tax cuts expire.

But that progress was overshadowed by gamesmanship. After Republicans demanded that any deal must include a new way of calculating inflation that would mean smaller increases in payments to beneficiaries of programs like Social Security, Democrats halted the negotiations for much of the day.

Yeah, yeah – it was that same old fight over how to define those wealthy taxpayers who would be required to pay more. Obama says those are the folks who earn over a quarter million dollars a year, the top two percent, but now the Democrats might fold and agree to raising taxes on only those who earn more than a half-million a year – but then Boehner, the week before, had proposed that be only those earning over a million dollars a year, and his House caucus had told him not to even bother trying to bring that up for a vote, as they’d only vote for massive spending cuts, not on higher taxes, on anyone, even if, in that case, that would be the top tenth of a percent of the top two percent.

There’s no satisfying these folks, and no one had ever mentioned cutting Social Security benefits before, at least in this current round of negotiations. That was new, and the Democrats saw it as a last minute poison-pill sort of thing, and they screamed bloody murder, which led to this:

The Republican leader in the Senate, Mitch McConnell, made an emergency call to Mr. Biden in hopes of restarting negotiations, and the White House sent the president’s chief legislative negotiator to the Capitol to meet with Senate Democrats. Soon after, Republicans withdrew their demand and discussions resumed, but little progress was made.

The Republicans thought they had been very clever, that they had the Democrats jammed, that this would be the start of rolling things back to 1928 or so, before the New Deal and all that, but for a change the Democrats didn’t meekly fold. And there was public perception to consider. The idea that the heroic Republicans would risk economic chaos merely to make sure old folks get less each year from the Social Security system they had paid into must have seemed tactically unwise. They beat a hasty retreat, and everyone went home a six in the evening. They’ll meet again on New Year’s Eve, the right sort of day for this sort of thing, the day of long and troubling endings and new and hopeful beginnings.

They will, but this was just more of the same, the argument that’s been going on for the last year about whether austerity – cutting as much spending as possible on everything in sight – leads to prosperity – the Republican notion – or whether getting more spending money into everyone’s hands, no matter how you do it, is what’s necessary now – the Democrats’ position. Fix the debt and everything will soon be wonderful? Get people working and the economy growing again, with more people paying taxes as we recover of course, and the debt will take care of itself? Which is it? These folks have been arguing about this all year.

The problem is that this won’t be the end of the argument:

Absent a last-minute deal, Mr. Reid is expected to move on Monday to bring to a vote a stopgap measure pushed by Mr. Obama, which would retain lower tax rates for incomes below $250,000 and extend unemployment benefits. But it was not clear that would even get a vote. The objection of a single senator on Monday would run out the clock on the 112th Congress before a final tally could be taken. …

Of course, a big question hung over the negotiations in the Senate: even if the Senate can find an accord, would it pass the House?

Who knows? Of course there are other odd things here, as Brian Beutler reports:

In a tremendous irony, Republican requests for lower tax rates, a high estate tax threshold, and a permanent AMT fix – combined with Democratic requests to delay the sequester, include a “doc fix” for Medicare physicians, and extend emergency unemployment benefits – have left the parties negotiating toward a plan that would result in no net deficit reduction over 10 years, according to Senate Majority Whip Dick Durbin.

Ah, it seems the deficit/debt thing was a diversion anyway. Something else was going on, and Ezra Klein offers this:

Today’s Republican Party thinks the key problem America faces is out-of-control entitlement spending. But cutting entitlement spending is unpopular and the GOP’s coalition relies heavily on seniors. And so they don’t want to propose entitlement cuts. If possible, they’d even like to attack President Obama for proposing entitlement cuts. But they also want to see entitlements cut and will refuse to solve the fiscal cliff or raise the debt ceiling unless there are entitlement cuts.

You can see why these negotiations aren’t going well.

In the Washington Post account of all this there’s this too:

Negotiators were trying to resolve a dispute over the estate tax, a critical issue for Republicans who have dubbed it the “death tax” and argue that it punishes people who build successful businesses and family farms.

In an agreement brokered between McConnell and the White House in 2010, estates worth more than $5 million are exempted and taxed above that amount at 35 percent. Republicans want to maintain that structure, while Democrats want to drop the exemption to $3.5 million and raise the rate on larger estates to 45 percent.

Keven Drum tries to clear the air on that:

Do you know how many people leave estates valued at more than $3.5 million? Something like 0.01 percent, give or take a bit. This is a tax that’s a huge deal for the super-rich, but completely irrelevant for nearly everyone else, including the merely ordinary rich. And needless to say, all the talk about small businesses and family farms is just a pretense. Virtually no family farms are affected, and the ones that are have extremely generous rules for dealing with estate taxes.

President Obama has Republicans dead to rights on this. “They say that their biggest priority is making sure that we deal with the deficit in a serious way,” he said on Meet the Press this morning, “but the way they’re behaving is that their only priority is making sure that tax breaks for the wealthiest Americans are protected. That seems to be their only overriding, unifying theme.”

No kidding. Drum had earlier noted how all the talk about small businesses and family farms really was just a pretense:

Back in the day, one of the key Republican arguments against the estate tax was that it forced hardworking, salt-of-the-earth children of small farmers to sell the family plot in order to pay their taxes after dad died. It was a sad story, but with one problem: no one could find even a single small farmer who had been forced to liquidate in order to satisfy Uncle Sam’s voracious maw. Even the American Farm Bureau Federation was eventually forced to admit that it couldn’t come up with a single example, and a few years later the Congressional Budget Office estimated that under the now-current exemption level, only a tiny handful of small farms were likely to owe any estate tax to begin with – and of those, only about a dozen lacked the assets to pay their taxes. And even those dozen had 14 years to pay the bill as long as the kids kept running the farm. In other words, the story was a fraud from beginning to end.

Yes, but here we go again:

The subject at hand is President Obama’s proposal to tax the rich at slightly higher rates, and the question is who exactly this will hurt. The obvious answer is, “the rich,” but it turns out that, just as there are small farmers begging for our sympathy, there are small rich too: namely an alleged army of hardworking, salt-of-the-earth small business owners who would also end up paying higher tax rates. “Don’t forget the fact that most small businesses file taxes as individuals,” Rep. Paul Ryan declared earnestly on Fox News this weekend. “So when you are raising these top tax rates, you’re raising taxes on these job creators.”

This is, however, nonsense:

The biggest part of Obama’s plan is to let the Bush tax cuts for the rich expire. The Brookings Tax Policy Center took a look at this last year and estimated that only 1.9% of small businesses are in the two top brackets that would be affected by repeal of the Bush tax cuts. That’s a little better than the dozen small farms affected by the estate tax, but not by much. …

About half of that 1.9% aren’t really small business owners at all. They’re high-income investors who get part of their income from investments in small businesses. So we’re down to about 1% of small businesses that would be affected. …

The top brackets are just that: brackets. When the top rate goes up, it doesn’t affect your entire income, just the portion in the top bracket. So if the top rate goes back up from 35% to 39.6%, it only affects the portion of income above approximately $400,000. A small business owner making $500,000 would see an increase of about $5,000. This is a fairly modest amount for someone making a half million dollars, and anything higher than that is hardly a “small” business to begin with. And the marginal effect is even smaller for the second-highest bracket. And the proposed “millionaire’s tax” would – of course – affect only people making more than a million dollars.

So there you have it:

Raising taxes on the rich at the level Obama is talking about affects only a tiny number of small businesses; it doesn’t affect them very much; and it generates revenues of several hundred billion dollars. If the only thing you care about is keeping taxes low for rich people, you won’t be convinced. For the rest of us, it’s a no-brainer.

Yes, but the arguments went on like that all day – unless on the eve of the eve you were watching football, like a sensible person. Everyone in Washington was stuck, bumbling along as usual – except for the Redskins, who beat the visiting Cowboys and won their division and are headed for the playoffs. Everyone else in town made no progress on anything.

Actually, that may not be entirely true:

South Carolina Republican Sen. Lindsey Graham conceded defeat in the fiscal cliff negotiations Sunday morning, saying “hats off to the president.”

In an interview on “Fox News Sunday,” Graham complimented President Barack Obama for sticking to his guns in talks with congressional Republicans.

“He stood his ground. He’s going to get tax rate increases,” Graham said. “It will be a political victory for the president.”

“The president won. The president campaigned on raising rates and he’s going to get a rate increase,” he added.

But Graham hinted that Republicans will now put up a tougher fight on raising the debt ceiling in the coming weeks, saying potential agreements to avert the fiscal cliff do little to deal with the nation’s debt crisis.

That’s ominous. Some people do make a New Year’s resolution on not compromising on anything, or at least anything important. Lindsey Graham just did, and Ian Millhiser at ThinkProgress puts it this way:

Although official Washington is currently fixated on the so-called “Fiscal Cliff,” the biggest threat to American prosperity is the debt ceiling, which must be raised in February to prevent economic catastrophe. If Republicans refuse to reach a deal on the so-called cliff, the Congressional Budget Office predicts that they will spark a new recession in 2013. But if Republicans block action on the debt ceiling, they will make that potential recession look quaint. Without raising the debt ceiling, the United States will be forced to embrace austerity so severe it will lead to a bigger GDP drop than that experienced during the Great Recession of 2008.

Lindsey Graham, however, threatened to oppose this bill unless Social Security benefits are simply taken away from millions of folks:

I’m not going to raise the debt ceiling unless we get serious about keeping the country from becoming Greece, saving Social Security and Medicare. So here’s what I would like: meaningful entitlement reform – not to turn Social Security into private accounts, not to take a voucher approach to Medicare – but, adjust the age for Social Security, CPI changes and means testing and look beyond the ten-year window. I cannot in good conscience raise the debt ceiling without addressing the long term debt problems of this country and I will not.

Millhiser offers the video, and the idea is that the retirement age, the age at which you could get what you paid for, be raised to sixty-seven or higher, to which Millhiser offers this:

This is extortion, plain and simple. It is the budgetary equivalent of threatening to break America’s legs unless Congress agrees to break the backs of millions poised on the edge of retirement. Graham’s position is that seniors should have to wait longer for their retirement benefits – even if they work in physically demanding jobs that literally tear the body apart by the time a worker reaches age 65 – and that those benefits should be reduced in the future.

And if Congress won’t agree to this deal, then Graham is prepared to thrust the nation into an economic calamity unheard of since the Great Depression.

Here we go again, and the economist Paul Krugman weighs in:

The key thing to remember – and what the GOP hopes you won’t understand – is that raising the debt ceiling only empowers the president to spend money that he’s authorized to spend by Congressional legislation; nothing more. Conversely, a party that refuses to raise the debt limit is saying that it’s prepared to inflict vast damage on America in order to achieve things that it couldn’t achieve through actual legislation – in effect, that it’s prepared to use vandalism to subvert the constitutional process.

Still, that’s where they’re going.

Back in 2003, when I published The Great Unraveling, I got a lot of ridicule from centrists over my claim that modern conservatism, which has taken over the GOP, was a deeply radical movement. (I also got a lot of grief for daring to suggest that Bush led us to war on false pretenses). At this point, does anyone doubt that that’s what we’re seeing?

All that Krugman can see here is a months-long epic confrontation:

Maybe Obama wimps out – in which case he’s effectively surrendered the presidency to Grover Norquist; maybe GOP leaders back down, but then face a civil war within their own party; or maybe we’ll have a vast, rolling crisis that won’t truly be resolved until the 2014 elections.

Happy New Year!

He’s being ironic. There’s nothing new coming at midnight at the end of this year. The more things change the more they remain the same, as the Washington Post’s Chris Cillizza notes here:

Yes, Obama won the election and did so quite convincingly. And, no, he doesn’t ever have to worry again about being reelected, which should, in theory, embolden him. But he is the only person involved in the fiscal cliff talks who has that luxury. Everyone else needs to keep one eye (at least) on their next race.

That mentality means that for the vast majority of Republicans in Congress, a deal is more dangerous than no deal. A deal creates the possibility of a primary challenge from their ideological right in districts and even states that, by and large, went heavily against Obama in November. No deal means they might – with the emphasis on “might” – face some blowback from constituents who want them to get something done for the good of the country and put the partisanship and politics aside.

They might, but they won’t:

And so, if you are wondering why congressional Republicans won’t, in the words of Obama, just “take the deal,” now you know. They have every political reason not to.

So New Year’s will come and go with nothing much changing. Out here it always seemed best to watch a little of the stuff from around the world and go to bed at eleven or so and sleep through it. The New Year will arrive one way or the other, no matter what you or anyone else does, and nothing will change. It always was an arbitrary demarcation anyway. Some days are inherently unsatisfactory, even if they have a name.

About Alan

The editor is a former systems manager for a large California-based HMO, and a former senior systems manager for Northrop, Hughes-Raytheon, Computer Sciences Corporation, Perot Systems and other such organizations. One position was managing the financial and payroll systems for a large hospital chain. And somewhere in there was a two-year stint in Canada running the systems shop at a General Motors locomotive factory - in London, Ontario. That explains Canadian matters scattered through these pages. Otherwise, think large-scale HR, payroll, financial and manufacturing systems. A résumé is available if you wish. The editor has a graduate degree in Eighteenth-Century British Literature from Duke University where he was a National Woodrow Wilson Fellow, and taught English and music in upstate New York in the seventies, and then in the early eighties moved to California and left teaching. The editor currently resides in Hollywood California, a block north of the Sunset Strip.
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1 Response to The Eve of the Eve

  1. Rick says:


    ” … the argument that’s been going on for the last year about whether austerity – cutting as much spending as possible on everything in sight – leads to prosperity – the Republican notion – or whether getting more spending money into everyone’s hands, no matter how you do it, is what’s necessary now – the Democrats’ position.”

    Ha! If that were only the case!

    Yes, you got the Republican position right, but if the Democrats really believed that, we wouldn’t have had Howard Dean on TV on Sunday, pushing the argument that we really have to do something about this awful deficit! (Shit, I can’t believe I voted for that guy in 2004.) And for all we know, Obama agrees with Dean!

    And we keep hearing Democrats talk about how we need to reduce spending! What are these people thinking?

    One of the many problems with this debate is nobody really stands for, in the case of the Republicans, (a) what they’re pretending to stand for, and in the case of the Democrats, (b) what they think they’re standing for.

    What the Republicans really want is actually quite simple, and has virtually nothing to do with the so-called “deficit” or the “debt” crises:

    All Republicans want is a tiny government, with not only lower taxes but also lower revenues, since they don’t want the government getting its hands on money to spend on things they shouldn’t be doing anyway, such as giving “services” to people. Yes, especially to the needy, but the fact is, they don’t want government doing anything for the well-off either.

    And what do the Democrats want? They don’t really know.

    They (we?) just want to keep on keeping on. They don’t see the problems with this country that the Republicans see, and just want to fix the economy so everything can get back to the way things were, which was just fine.

    And how to fix the economy? They don’t really know. Their problem is they don’t really give it enough thought, at least not enough to argue for a path to get us to where they want us to go. Example: While Republicans have all sorts of suggestions on what to do to “save” Social Security and Medicare, what are the Democratic suggestions? Who knows. They never talk about it. Although they know Americans want to keep these programs intact, Democrats still seem to get themselves in discussions on how to reduce benefits, or to raise eligibility ages, rather than figure out how to pay for the programs. The problem with Democrats is they listen more to Republicans than they do to their own Paul Krugman.

    And one more thing: I’m getting tired of the networks airing these sound-bites from “just folks” who berate both parties for being incompetent and not solving this.

    Okay, so we criticize Republicans for saying we need to cut spending without specifying which cuts to make, why can’t we also get on the cases of these “ordinary fed-up Americans” for their generic, non-partisan bullshit? If they think it’s so easy, what solution would they suggest?

    As a matter of fact, I myself don’t want a compromise. I’m tired of our side trying to compromise with these evil people who are threatening my country with economic ruin. Instead of compromising, I think our side needs to try to win! Make the case, then vote for what we believe in!

    But the truth is, I think we will be going over the cliff, since if just one of the two sides really wants us to roll over it, we will roll over the cliff. And once we do, it will be nearly impossible to prove which side made it happen. (In fact, I think at this point, both sides want to do it, each for their own reason.)

    But in the meantime, the thought of these negotiators spending New Year’s Eve together and, after the countdown, having nobody to kiss but eachother? Not a pretty picture.


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