President Barack Obama has billed his "grand bargain" as the adult compromise because it has something for everyone to hate. The package would raise the $14 trillion debt ceiling (which the public hates), raise taxes by $1 trillion (which Republicans hate) and cut spending by $3 trillion (which Democrats hate) over 10 years. As the president argued in Monday's news conference, it's time for Washington to eat its peas.
The administration is under the gun to raise the debt ceiling before Wall Street gets spooked, ratings agencies downgrade the nation's credit rating and interest rates go up. Thus, there is a problem with the Obama approach. Sure, it scores well in Washington's 24/7 blame game. But in a town where measures need a majority vote to pass, it's usually a lot harder to pass a measure that raises taxes.
Now, I am no anti-tax purist. When the economy finally stabilizes and Washington eventually gets around to tackling the federal debt, I expect to see a plan that cuts spending and raises revenue.
But with a nationwide unemployment rate of 9.2 percent and the economy hobbled by public skepticism that Washington actually can reduce spending, this is no time to raise taxes -- even if, as President Obama likes to point out, the increases do not take place until 2013.
While pundits scold Republicans for not supporting the "grand bargain," it is not clear the package could pass even if House Speaker John Boehner signed on. House Minority Leader Nancy Pelosi has come out against any cuts in entitlement spending -- an extreme position that breaks the deal.
Me? I can't get past the suspicion that the "grand bargain" is one big gimmick. For one thing, Obama opposed a similar compromise in February, after bipartisan fiscal hawks Erskine Bowles and Alan Simpson released their plan to save $4 trillion. And: Obama has yet to release his plan in writing.
At Monday's presser, Obama argued that his tax increases would get "rid of some of these egregious loopholes that are benefiting corporate jet owners or oil companies at a time where they're making billions of dollars of profits."
Problem: The White House wants to maintain those ethanol subsidies, albeit at a reduced level, even after the Senate voted 73-27 to end them.
Also: Unaware as to how egregious corporate jet loopholes are, I contacted the White House to find out how much money could be gained by ending the tax break. I got an answer on background: The administration wants to change the depreciation schedule for corporate jets from five years to the seven-year schedule for commercial planes but does not know how much would be saved.
Oh, and spokesman Jay Carney says that the GOP "maximalist" position essentially argues: "We would rather have the United States not maintain its full faith and credit. We would rather have that than eliminate tax subsidies for the oil and gas industry, which has had tremendous multibillion-dollar profits. We would rather have that happen than eliminate a loophole for corporate jet owners."
In short, with a gun to the head of the U.S. economy, the White House worked up a talking point on loopholes regarding corporate jets before it did the math.
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