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… if stimulus spending is part of the deal.  (Reposting this diary from a prior comment).

Any benefit cuts will cut growth and will be used to cut up Democrats in future elections.

The only issue on which it is reasonable for Obama to make concessions in order to get a deal passed by the House is on short-term and perhaps medium-term revenue.

For example, provide for the top Clinton tax rate to start at the income threshold of $500K in 2013, and for this threshold to be reduced by $50K each subsequent year so that it reaches $250K in 2018, and then stays there.

Economically, this type of gradual revenue increase:

(a) would address the only federal budget deficit issue that matters at all, which is the long-term trend, and

(b) would avoid counteracting the government stimulus (including various spending that would need to be part of the deal) which now appears from economic data to be crucial to maintain and increase for at least the next couple of years.

Politically, this type of gradual revenue increase:

(a) would increase economic growth and reduce unemployment, thereby putting a stake through the heart of the Republicans' 2008-2012 attempt to weaken the economy in order to weaken Democrats, and

(b) would enable Boehner to show his contributors and other anti-tax fanatics that he had done something for them -- i.e., further delaying the full expiry of the temporary Bush tax cuts, with most of the reductions coming after the 2014 and 2016 elections, when, if the Republicans win big, they would have the opportunity to pass legislation replacing this sequence with new tax rates.

I hope that Obama (consistently with his famous preference for gradualism) is secretly considering making this his final offer to Boehner, and has only been bluffing that an immediate 250K threshold is a more important bottom line than preserving benefits and stimulus.

For hardcore anti-anti-deficit readers, an even longer-deferred variation on this approach is discussed below the jump.

Of course the win-wins of this approach could be made even stronger by providing now for:
zero tax increases during 2013-14, followed by a
750K threshold during 2015-16, a
500K threshold during 2017-20, and then a
250K threshold from 2021.

But the negatives of an 8-year transition to increasing revenue would include the following:

(a) It might bring the proverbial bond vigilantes out of hibernation in a few years, and

(b) It would certainly be perceived by everybody as kicking hard choices too far down the road.

An 8-year transition to increasing revenue would lend a talking point to the liars who assert that "both parties are fiscally irresponsible" but:

(a) most of those liars will keep lying whatever the Democrats do, as the transition from Clinton's surpluses to W's deficits proved, and

(b) 8 years of partial revenue increases would be a year shorter than the 9 years of W's original tax-cuts -- a comparison which lends itself to snappy sound-bites that not only defend the 8-year approach but also remind the audience of who dug us into a fiscal ditch in the first place.

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