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McConnnell was also referencing other parts of the plan that include “nearly $580 billion in cuts and reforms to mandatory programs.” Yet 90 percent of those cuts will come from “reducing overpayments in the system,” according to a senior administration official. That is yet another euphemism. It means service providers, as in doctors and hospitals, will bear the overwhelming brunt of the cuts, while service recipients remain relatively unscathed. If one is looking for phantom savings, as McConnell refers to them, it should be noted that Congress has refused to pass scheduled physician payment cuts for Medicare and Medicaid services since 2002. There is absolutely no reason to believe they would do so now.
As for the “$1 trillion in savings over the next 10 years from our drawdowns in Afghanistan and Iraq,” one hopes such a reduction is possible. Yet it seems that counting such savings as automatic, even as “Arab Spring” leaves events the Middle East largely in flux, is somewhat optimistic. Unless some basic understanding of war has been abandoned, “events on the ground” still ultimately determine how big a spending reduction can actually be. In fairness, Republicans have also counted such savings during debt negotiations with the president.
The last large number, the $430 billion in savings realized by less borrowing and smaller annual budget shortfalls, is another calculation based largely on optimism. Interest rates for borrowing are near historic lows. And interest rates are driven by our continued ability to sell public debt, much of which remains attractive only because Europe, enmeshed in an existential debt crisis of its own, looks worse by comparison.
Far more important than the individual details of the plan however, is the likelihood of its passage. While some individual items may garner bipartisan support, such as broad-based goals to lower tax rates by enacting tax code reform, the passage of this plan in its entirety is not going to happen. Democrats remain ideologically committed to keeping entitlements largely intact, while Republicans remain convinced that tax hikes, as opposed to tax reform, will kill job creation.
Yet it is not just Republicans who have opposed tax hikes. Back in 2010, 139 House Democrats joined 138 House Republicans to extend the Bush tax cuts, while 112 Democrats and 36 Republicans voted against them. The Senate vote was 81-19 in favor of keeping the cuts. Both houses of Congress were controlled by Democrats. Several prominent Democrats were quoted in the months leading up to that vote, with most of them noting that tax increases in the midst of a bad economy would severely hinder a recovery. One of those Democrats was the president himself.
So what’s changed? Next to nothing with respect to an economic recovery. On the other hand, a special election for disgraced Democrat Anthony Weiner’s seat was won handily by Bob Turner. He’s the first Republican to represent New York’s 9th Congressional district district since 1923, despite Democrats’ 3-1 edge in registered voters. The president’s job approval rating has hit an all-time low among liberals, down from a stratospheric 92 percent in May of 2010 to just 68 percent currently. Those same liberals are now vowing to mount a primary challenge to the president. And the administration is embroiled in two potentially significant scandals with respect to Mexican gunrunning (Fast and Furious) and a bankrupt solar company which burned through a half billion dollars in taxpayer money (Solyndra).
All of the above makes it exceedingly possible that Democrats running for office in 2012 will think twice before offering their unconditional support to the president.
Moreover, it is the 12-member “Super Committee” tasked with finding $1.5 trillion in savings that will be the ultimate arbiter regarding any combination of spending cuts and tax increases, whether that achievement is accomplished via bipartisan negotiation or automatic triggers. In the unlikely event the committee reaches an agreement, there is virtually no chance the president would veto it, despite his pledge to do so absent tax hikes. The whole point of the president’s latest proposals is to portray himself as a man standing against congressional Republicans in particular, but also against a “do-nothing” Congress in general if it becomes necessary. If the Super Committee reaches an agreement, a presidential veto would completely undermine that strategy.
As for the president’s “fierce urgency of now,” it was Democratic Senator Dick Durbin (D-IL) who injected a dose of reality into that characterization. In an exchange with Candy Crowley on CNN’s “State of the Union,” he admitted that the earliest the Democratically-controlled Senate would take up the president’s proposals was early October. How that delay accrues to charges of Republican “obstructionism” is anyone’s guess.
Yet how another re-hash of economic proposals based on class warfare, which are nothing more than Keynesian economics with a populist twist, are going to revive the economy — when they have already failed before — remains an even bigger question.
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