Saturday, April 7, 2012

How To Negotiate Like A Republican

In the wake of dishy insider accounts recently reported in The New York Times Magazine and The Washington Post of last summer's debt ceiling negotiations and the public release of Congressman P90-Xs, excuse me, Paul Ryan's latest "how to fuck the poor and elderly" budget, one thing is clear about how Republicans roll at the national level - when it comes to wielding the budget ax, they are more than happy to swing it heartily and deeply at social programs while the concessions they offer in return are ill defined, rely on sketchy budget "scoring" and are as ephemeral as cotton candy. 

Let's start with the debt ceiling negotiation. You remember that, right?  It was the episode of "Government By Hostage Taking" that occurred last summer when, what had been, under every prior Administration of oh, the last 50 years, a routine matter of extending the government's credit line, turned into a game of chicken manufactured by Republicans in Congress to get the President to agree to drastically cut the "big three" entitlement programs (Medicare, Medicaid and Social Security) in return for an increase to the debt ceiling caused almost entirely by those very same Republicans' votes for unfunded wars, Medicare Part D and massive tax cuts, most of which went to the wealthiest Americans. Welcome to politics in America circa 2011.  

For reasons that were never sufficiently explained, instead of calling the Republicans' bluff and seeing if they would, in fact, vitiate the "full faith and credit" of our government's monetary printing press, the President took the bait and engaged in negotiations with House Speaker John Boehner to try and reach a  so-called "grand bargain" that would bend the debt curve and show, I don't know, the bond market, the rest of the world (who must have been laughing at us), the American people, or perhaps our evil alien overlords that we were "serious" about reducing our long-term debt and deficit.  

As reported by Matt Bai in the New York Times Magazine and, based on reporting that was done after the deal broke down, Obama agreed to very specific cuts the Republicans wanted, including raising the Medicare eligibility age, tweaking the formula for Social Security (that would result in less generous benefits), and hundreds of billions of dollars in cuts to Medicaid, pensions for civilian and military personnel and reductions in farm subsidies on top of a $1.2 trillion reduction in overall discretionary spending over 10 years.  Of note, the big ticket items, such as the Medicare cuts, which were estimated to save more than $1 trillion over 20 years, could literally be done in a single line, by changing the number that qualified "eligibility" from 65 to whatever the new number would be.  Similarly, the new formula for Social Security would simply be swapped in for the existing formula used to calculate benefits.  In other words, the cuts the President agreed to would be very simple to make, literally small strokes of the pen largely devoid of the potential for any chicanery.  

And for these major concessions that went against the most deeply held convictions of the Democratic party since FDR was President, surely the Republicans were willing to sacrifice a few of their sacred cows, right?  Wrong. As reported by Bai, the one major concession Republicans were willing to offer was a tax increase that wasn't really a tax increase because it was based on using fuzzy math and relying on a reconfigured tax code to somehow magically land on just the right amount of additional revenue without capturing one penny more. 

Instead of simply agreeing to a tangible step, like rolling back the so-called "Bush Tax Cut" rate for people making over $250,000, Boehner used a convoluted calculation distinguishing "current law" scoring estimates from "current policy" estimates to come up with an offer of $800 billion in "new" tax revenue.  But this would not be accomplished through something simple like a roll back of taxes or a millionaire's surcharge, either of which could be accomplished through inaction (the Bush tax cuts are set to expire at the end of this year) or at most, a few paragraphs of information (creating a surcharge at $1 million in net income), but rather, through amorphous "tax reform" that would eliminate deductions (Boehner did not say which ones) while lowering rates.  Of course, any reform of tax policy is a far more complicated thing to do than say, raising the Medicare eligibility rate from 65 to 67.  Reforming the tax code would open the process up to all form of lobbying by special interest groups and would likely drag on for months.  And even if tax reform occurred, one need only remember that a similar effort was undertaken in 1986 only to have those efforts undermined by the very exemptions, special interest language and loopholes people now rail about! 

Indeed, so concerned was the President that Republicans would double cross him on the debt deal that he asked for triggers to be inserted into the deal if the tax reform Boehner desired was not implemented.  The cost?  Oh, just the elimination of the individual mandate in the Affordable Care Act.  What did health care have to do with raising the debt ceiling? Nothing, other than it being another hostage that Republicans were happy to take in their effort to destroy any Obama policy legacy.  Ultimately, the sides walked away from the deal (the long read stories are mixed in who to "blame") and a convoluted bill passed that ensured the debt ceiling was raised, but at the pain of losing out Triple AAA rating from Standard & Poor.  

While the debt ceiling debacle may be more an example of Obama being a weak negotiator or Republicans being savvy enough to leverage a looming crisis to their advantage, Congressman Ryan's budget is a doctrinal statement that offers a similar theme of concrete cuts in exchange for vague and ill defined changes to tax policy that will, like that supply side voodoo, magically cut taxes but grow revenue. 

Right out of the gate, the premise of Ryan's budget is wholly undermined.  As reported by Ezra Klein ( literally, in the first paragraph of the Congressional Budget Office's "scoring" of Ryan's budget, they note that their scoring of his budget is based (at Ryan's request!) on assuming all of his estimates for tax revenue, how much each program will cost, etc. are accurate and true.  Which is not unlike a parent asking a chid to accept as an article of faith that a rotund man in a red suit comes down the chimney and places presents under a tree. A few pages later, the CBO spelled out the "rules" Ryan and his team laid down, which, unsurprisingly, are entirely unrealistic and will never be met.  

So if you get past the fact that the budget Ryan created is based on fake numbers that have never been replicated in modern American history, you can drill down into the "substantive" parts of his document.  The "cuts" part is pretty straight forward.  It repeals the Affordable Care Act (not a difficult thing to do in theory, but when you get into the nitty gritty of the myriad good things the ACA does, would never be repealed in full unless the Supreme Court does it), which would, ironically, raise deficit forecasts, since the ACA has been scored to save trillions over 20 years and, even more ironically, transforms what is now a government guarantee of health care for the elderly (a/k/a Medicare) into a voucher program that would leave seniors scrambling to buy policies …wait for it… on the open market, much like what the Affordable Care Act set out to do.  Apparently, irony is not something that was factored into the budget drafting in P90-X's office. 

While Ryan and his team attempted to finesse the "end Medicare as we know it" label that his 2012 budget was tagged with, even in his new proposal, which would kick in for retirees beginning in 2023, seniors would still get that vaunted voucher to purchase private insurance, but this time, Ryan would guarantee that the voucher would be enough to pay for at least one insurance policy in full.  Sounds reasonable, right?  Look at the fine print. That guarantee is only for the *first* year. After that?  You're on your own, granny.  Good luck finding the $6,600 additional dollars to cover what your voucher does not.  Other specific cuts would reduce the number of young people eligible for Pell grants, reduce research funding for NIH and kick hundreds of thousands of poor children off Head Start.  Of course, this type of austerity for the elderly, infirm and young is called "heroic" among the chattering class in Washington, D.C. (for more on the Ryan budget's true effects, check out:

Lastly, Ryan wants to block grant Medicaid, that is, send a lump sum of money to states and allow them to manage this crucial health program for poor people.  The only problem with Ryan's plan is the formula he uses to fund it is based on consumer prices, not the increase in cost of health care, which, unsurprisingly, goes up at a far greater rate than consumer prices.  By doing so, Ryan would cut $800 billion from the program while, according to the Kaiser Foundation, throwing nearly 20 million people off Medicaid.  If you add the roughly 14 million people who will become eligible for Medicaid in 2014 under the Affordable Care Act, which expands eligibility to 133% of the poverty line, the Ryan budget would almost half the number of people who would otherwise be able to acquire health coverage under Medicaid in 2014. 

Indeed, as Klein notes, almost the entire difference in the cost savings realized under the President's plan and Ryan's comes from the latter's evisceration of programs that largely help the poor.  Of course, when it comes to taxes, like Speaker Boehner, Ryan is maddeningly unspecific about the hard decisions.  He puts one easy one out there, reducing to two the number of tax brackets within the tax code, but somehow, his policy is "revenue neutral" because he assures us various loopholes, subsidies and other tax giveaways will be removed but no additional revenue above what the government currently collects will occur.  Which loopholes will he close? No clue, and as with Boehner's idea for "tax reform," would leave the details to a Congress under the sway of the wealthy, who are keenly interested in protecting their interests.  

In short, just like the Speaker, Ryan is excruciatingly exact when it comes to where he wants to cut and who would bear the entire burden of those cuts (the elderly, poor and children) while being as opaque as a Monet haystack painting when it comes to touching tax revenue (except when it comes to lowering rates, naturally). Moreover, all of the pain that is inflicted on the poor is immediate, while changes to Medicare are punted 10 years down the road.  If it is true that a society is measured by the manner in which it treats its poor, elderly and children, Ryan argues in favor of a dystopia that Dickens would instantly recognize. 

Of course, facile plausibility is all that Republicans seek.  If they can frame budget policy as shared sacrifice, even though the sacrifice is specific and immediate as to the poor and working class and vague and somewhere in the future (if ever) to the wealthy, it is of no moment.  An "in the weeds" discussion of policy is lost on most Americans who are either uninterested or unwilling to get into the minutiae of proposals to read the fine print (it's also part of the reason so many people take out bad loans, but that's another story).  As long as Republicans can hold themselves out as fiscal stewards (their record of borrowing and spending notwithstanding, but when did facts get in their way?) and as long as they can manufacture the idea of a "crisis" in programs like Social Security or Medicare, they can bullet point their way through any cable gabfest and appear reasonable even though a 10th grade debating class could point out their hypocrisy and contradiction, something most talk show hosts appear unwilling to do (I'm looking at you, David Gregory). 

In this way, the Republicans have adopted Barnum's maxim that no one ever went poor underestimating the intelligence of the American people.  Republicans have successfully gotten middle and lower middle class people to vote against their economic interests since Reagan waltzed into office and they think they can get away with it again.   It is only when people take the time to get informed about policy that the charade will end.  An ignorant electorate might hand Republicans a huge political win, but such a victory would be an enormous loss for the country.  

Oh, and if you're interested in reading a plan that actually achieves the things Ryan claims to (balancing the budget) while also making investments in infrastructure, education, securing Medicare and Social Security and protecting the poor, check out:,81.  No one in "official" Washington likes talking about it, but don't let them tell you there is not a progressive alternative. 

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