Money is Time for Obama on Debt Deal and Re-Election
“They believe that one percent of the wage earners controlling 24 percent of the wealth in this country is a vehicle by which you can spur economic growth, because those with the wealth… will know best to do with that wealth.”
-- Vice President Biden in an attack on Republican economic principles in a speech to the National Education Association, the nation’s largest union for school employees.
How much further can President Obama push the debt negations?
With the deadline fast approaching for a deal on Obama’s request for an increase in the federal government’s $14.3 trillion credit limit – Democrats have set July 22 as a target in order to give Congress time to digest the package and avoid any disruptions to federal cash flows – pressure is building on the president to accept the agreement already reached for approximately $1.4 trillion in new deficit spending in exchange for the same amount of cuts over the next five years.
Over the weekend, former President Bill Clinton at the Aspen Ideas Festival urged Obama to accept a “mini deal” to stave off a fiscal crisis and then return to the same issues later. Sen. John Cornyn, R-Texas, on “FOX News Sunday” expressed openness to a short-term agreement.
The goal has been an increase of more than $2 trillion, enough to last through the next election. But talks broke down two weeks ago, still considerably short of the target number. Republicans walked away from the talks over Democratic insistence that tax increases be added to the mix, and Democrats went on the attack.
Democrats, led by Obama, went on a class-warfare blitz last week, demanding that Republicans yield on resentment-building exemptions for big corporations – private jets and oil inventories. The sums involved are smallish, and Democrats have argued that it is the least that corporate plutocrats can do.
But there have all along been two larger, broader tax increases behind the scenes, as the Wall Street Journal outlines today.
One would decrease tax exemptions on charitable giving for the target group in the overall Obama tax strategy – those families that earn more than $250,000 and individuals who make more than $200,000 – from 35 percent of the value of gifts to 28 percent. The Journal reports that if giving didn’t drop as a result of the new taxes, it would mean $290 billion in new tax payments over the next decade.
This has been a long-sought hike for the Obama economic team. It was part of the first budget proposal from the administration, but high anxiety from charitable groups caused Democrats to abandon the plan.
The second big proposed increase would take as much as $60 billion out of corporate coffers over the next ten years. The president wants to take away the ability of companies to pay taxes on inventories based on current market prices, not the price at which they purchased the items.
The law currently allows companies to offset commodity price disruptions or falling prices for their products, a practice the White House seeks to end.
Most Republicans are flatly opposed to either of these two broad tax increases, but by tying these two big-ticket items to the more sound-bite friendly items about Gulfstream jets and oil tycoons, Democrats are hoping that they can push through the more controversial items.
Obama has also suggested that another way to get to the $2 trillion figure – and get him past Election Day without repeating this process – would be to cut the payments to Medicare and Medicaid providers. The ideas are in furtherance of existing goals for overhauling the programs inside the president’s national health care law, but could be counted as new savings in the debt deal.
Republicans have called for structural changes to the programs, like increased eligibility ages and means testing for Medicare and giving states more authority over spending on Medicaid.
As the debt deadline draws nearer, the question for Obama is how far he is willing to push to get enough borrowing power to cover the rest of his term.
A major deal that sorts out the tax code and overhauls entitlements seems most unlikely in the next two weeks, so Obama may be forced to accept a symbolic victory on a marginal issue – like the $2 billion to be extracted from companies by lengthening the time over which they are allowed to depreciate the cost of their corporate jets – and prepare for another round of bargaining.
As much as Obama doesn’t want to go through this ordeal again, he also knows that the weakening economy would suffer more if he skates too close to the edge. Investors and capitalists would prefer long-term stability, but if a grand bargain were not possible, they would rather see speedy resolution, not brinksmanship.
Clinton’s point is that there’s no sense in waiting to take less if you know you can’t get more. The political wisdom is unassailable: a deal helps the economy and the better the economy the better Obama’s chances of reelection.
Every billion in new borrowing the president can wring out of Congress puts the president closer to Election Day, but every day he keeps negotiating deepens anxieties about a real impasse.
Perry’s Big Cash Haul May Help Seal Governors’ Support
“It’s a demonstration of executive leadership, and that’s what governors respect. And it doesn’t hurt that it will help get them reelected.”
-- Aide to a Republican governor to Power Play on the record-setting $22 million quarterly cash haul by new Republican Governors Association head Gov. Rick Perry of Texas.
The nation’s Republican governors have mostly stood silent on their 2012 preferences, but a huge fundraising quarter by the new chairman, Texas Gov. Rick Perry, may help clarify their thinking.
Perry succeeded cash king Gov. Haley Barbour at the start of the year amid expectations that fundraising would fall off, but Perry has kept up the pace. The $22 million for the second quarter of 2011 is nearly double what the group brought in during the similar periods in the most recent off years, 2009 and 2007.
“It’s easier to raise money for the RGA than for a presidential campaign, but this does kind of dispel the notion that Perry lacks national fundraising clout,” an aide to another Republican governor familiar with the group’s fundraising efforts told Power Play.
The Republican governors are expected to endorse en masse, as they have in the last several cycles. While there may be a few regional holdouts, the idea is to deliver the largest boost possible. The governors were expected to back one of the two former governors in the mix, Mitt Romney and Tim Pawlenty, but Perry’s potential candidacy has changed that thinking.
“They want a governor. That’s no secret,” the aide said. “They want someone who will respect state-issues and has that kind of experience.”
With prize endorsements like those of New Jersey Gov. Chris Christie and Indiana Gov. Mitch Daniels dangling, the group’s endorsement could be highly valuable – not to mention their help in fundraising.
The big quarter also alleviates the concern among some Republicans that Perry may have neglected his duties at the RGA as his presidential flirtations became more ardent.
Perry is said to have spent the holiday weekend recovering from minor back surgery and reviewing the findings of his political team from a couple of weeks of waters testing. A consultant who would be a likely participant in any Perry campaign told Power Play that the indicators “would be good news” for those encouraging the three-term governor to run.
"I'm afraid I think the chances of the opposition forces entering Tripoli is unlikely in the near future.”
-- British Defense Secretary Liam Fox telling the House of Commons that the Libyan civil war "could take some considerable time yet" as rebel forces continue to struggle.
As Libyan rebel armies prove unable to hold the gains secured by American and European air power, the regime in Tripoli is increasing the pressure for a truce.
The question for President Obama and his fellow NATO leaders is whether to try to press through and topple dictator Col. Mummar Qaddafi and drive his tribes from power in favor of a coalition of rival tribesmen and Islamists, or accept a shaky cease fire between the bitter factions.
With limited support for the regional and religious revolt in the rest of the country, the original vision of a speedy rout of the four-decade-old dictatorship followed by a interim government, a la Egypt, have disappeared.
Support is fading for the war in Europe and the Arab and African groups that once blessed or ignored Western intervention are pushing harder for a truce. President Obama, facing a revolt in Congress over his unauthorized commitment of U.S. forces to the war, is ill-situated to provide any more firepower to the stalled effort.
And Now, A Word From Charles
“But the problem is at the consumer level, confidence is low. We showed we had underemployment with one out of every six Americans. And the worst element of that is that among the unemployed, more than approaching half have been unemployed for over six months. That is historically unprecedented in the United States.
It's a phenomenon that is seen often in Europe, rarely seen here. In 2007, the average time to get a new job was five weeks. It's now near six months. And that implies a whole segment of the population, the more elderly or the middle-aged who may never get employed again.”
***Today on “Power Play w/ Chris Stirewalt”: Rep. Jeff Duncan, R-S.C. and A.B. Stoddard of The Hill. Tune in at 11:30 am Eastern at http://live.foxnews.com/ ***
Chris Stirewalt joined Fox News Channel (FNC) in July of 2010 and serves as digital politics editor based in Washington, D.C. Additionally, he serves as the host of "Power Play" on FoxNews.com and makes daily appearances on the network including "America Live with Megyn Kelly," "Special Report with Bret Baier," and "Fox News Sunday with Chris Wallace." Most recently, Stirewalt provided expert political analysis during the 2012 presidential election.