Important to nothing, I'm curious how folks think the fiscal thingie negotiations will turn out. As a measuring point, let's take President Obama's offer today as reported by the NYTimes:
President Obama delivered to Speaker John A. Boehner a new offer on Monday to resolve the pending fiscal crisis, a deal that would raise revenues by $1.2 trillion over the next decade but keep in place the Bush-era tax rates for any household with earnings below $400,000. [...]So, tax rate of 39.6% for income above 400k (and other measures capital gains rate hike, cap on deductions, etc.) that will produce $1.2 trillion in new revenue, $122 billion in cuts through chained CPI, $290 billion in saved interest costs, $100 billion from defense spending, $400 billion from Medicare and Medicaid, and $100 from Congrssional discretionary spending (not sure where this will come from.)
The White House says the president’s plan would cut spending by $1.22 trillion over 10 years, compared with $1.2 trillion in cuts from the Republicans’ initial offer. Of that, $800 billion is cuts to programs, and $122 billion comes from adopting a new measure of inflation that slows the growth of government benefits, especially Social Security. The White House is also counting on $290 billion in savings from lower interest costs on a reduced national debt.
Of the $800 billion in straight cuts, the president said half would come from federal health care programs; $200 billion from other so-called mandatory programs, like farm price supports, not subject to Congress’s annual spending bills; $100 billion from military spending; and $100 billion from domestic programs under Congress’s annual discretion.
In the course of negotiations, the final deal will surely be worse than this, if there is a deal, imo. My prediction:
S1 trillion in new revenue, $122 billion from chained CPI, $280 billion in saved interest cost (total savings will end up being lower so interest payments will be slightly higher) $80 billion from defense spending (of course this will not hold over time), $420 billion from Medicare and Medicaid, and $120 billion from Congressional discretionary spending (also will not hold over time.) Total "deficit reduction" - $2.2 trillion over 10 years.
What will be lasting? Not much. Taxes will depend on who wins elections. The GOP will lower taxes on the rich as soon as it is permitted. It will increase defense spending as soon as it can. Will it cut programs? Not so much I think. They are more about cutting taxes than anything else.
What will hold? The cuts to Social Security, Medicare and Medicaid. They always do.
A good deal? It depends. On what? On what stimulus spending,, if any, is part of the deal. Unemployment insurance, infrastructure spending and very importantly, Sandy releif spending are very important to this deal. One last key point that may blow up the whole deal - the debt ceiling. Obama wants a two year increase. Boehner is offering 1. I think Boehner prevails on this. Why? Because I think Obama tipped his hand today - he'll bend plenty for a deal. Boehner and the GOP will certainy think so at any rate. They'll hold the debt ceiling to one deal.
A deal worth doing? If the stimulus is big enough (assuming it exists at all), I'd say yes. I don' think it will be. But I think a deal will be done. President Obama wants it. And he will give in to get it.
Hope I'm wrong. What do you think?