By James Kwak
Nothing, as far as I can tell.
The media are reporting the potential Obama-Boehner deal as $3 trillion in spending cuts and $1 trillion in unspecified future revenue increases. But as far as I can tell (details are vague), the baseline for that $1 trillion tax increase is a world in which all of the Bush/Obama tax cuts are extended.*
President Obama can personally guarantee that none of those tax cuts will be extended, simply by promising to veto any bill that extends them. That would increase tax revenues by $3-4 trillion over ten years, not $1 trillion. That is enormous bargaining leverage against a Republican Party that only cares about one thing: tax cuts.
So as far as I can tell, Obama is handing the Republicans $3 trillion in spending cuts, and also handing them $3 trillion in tax cuts. There are only two possible interpretations that I can think of. One: Obama thinks this is the best deal he can get — but if that’s the case, then you have to ask why his starting point wasn’t letting all of the tax cuts expire. Two: Obama thinks this is a good outcome.
But this certainly isn’t a progressive outcome. And giving up $3 trillion in revenues isn’t a fiscally responsible outcome, either. So what does that say?
* That’s how Ezra Klein reads it.