McConnell laughs at Obama's fiscal cliff plan

[Torie]

Obama offered 1.6 trillion in new taxes, 400 billion in cuts (none involving entitlements), and a permanent automatic  increase mechanism in the debt ceiling, castrating the Pubs bargaining power forevermore. That's ludicrous.

My patience is exhausted. Unless Obama makes an offer that is serious (the Pubs at least made a serious offer - 800 billion in more revenue in exchange for cuts in entitlements in some unspecified amount), the Pubs should just pass the middle class tax cut, and let the taxes rise for "the rich," and let sequestration kick in as well, and announce that they won't be raising the debt ceiling until there is a master deal, or substantial progress towards one, and the government should start planning now on slashing spending by 30% or whatever is required to cap the amount of the debt given the debt ceiling limit if Obama does not plan on getting serious.

It is really, really simple. Other than the baked in the cake rise in taxes on the rich, the government does not get a dime more revenue expect in exchange for entitlement cuts. Budgets can be repealed by the next Congress and are not worth the paper they are printed on. Taxes are statutory, just like entitlements, and need to be tied to the hip. The Pubs need to really, really clear about this. Let the media howl, let the Dems howl - too bad. It's time to come to Jesus. It's time to concoct a real fiscal cliff, rather than the phoney one we have now. Do the Pubs have the guts to stare Obama down, that is the question.

[Torie]

Obama won't get everything he wants! Come on now, don't be silly. He just proposed that as a starting point. Why don't the Republicans come out with their maximalist position on entitlement cuts? Oh, that's right. Because their own base doesn't understand what entitlement cuts mean.

I told you both parties need to come up with them behind closed doors. But yes, if there is to be no deal, and it's fiscal cliff meltdown time, to bring the whole stinking mes to a roiling boil, then yes, the Pubs will need to come out of the closet, and explain where the entitlement cuts should be, or what the options are at least from which to pick, and why the painful entitlement cuts are necessary, because otherwise, we are headed the way of Greece absent raising taxes on the middle class, and by more than just reverting them to the Clinton era rates - much more.

And I wish they would push converting Medicare into an HMO based system, where everyone gets private insurance paid for by the government, but only paid for up to the HMO rate based on competitive bidding for a given level of coverage, with maybe a means tested copay. And I wish they would do that so it affects me. But yes, I know, I'm daydreaming now. My ideas are just too sensible to have a prayer. We prefer doing things the way the dumbs do it. We're pathetic really.  

In the meantime, the Pubs are howling to keep those government crop insurance subsidies going (about 70% of the crop insurance premium is paid for by the government - yes seventy percent!), so farmers only have upside "risk," and can't lose money, no matter what the weather. Our tenant farmer on our farm and others, got about 100K this year.  We got about 10K for not planting crops on land where it would not be profitable to plant them anyway. I just got the check in the mail.

Jackasses - almost all of them - that's what they are.

Thank you.

[Torie]

Obama won't get everything he wants! Come on now, don't be silly. He just proposed that as a starting point. Why don't the Republicans come out with their maximalist position on entitlement cuts? Oh, that's right, because their own base doesn't understand what entitlement cuts mean.

In any case, the stunt you proposed won't work. Republicans should try it though. It will turn even the business community against them.

Also even from your post the numbers are becoming clear, aren't they? $1.2 Trillion in tax hikes and some unknown amount in entitlement cuts (probably using the framework Bob Corker outlined which I used above as well). I think something like this framework will occur. The powers that be want it to happen so it will.

Oh, Obama will fold rather than have 30% of the government shut down. And I don't see why that would be bad for business actually, at least in the short term.

[Torie]

Well, that is all speculation. I think what business really wants is a sound fiscal plan to get us out of the woods - not smoke and mirrors.

I tried, but I can't find a number as to how much Corker plans to cut entitlement spending, nor how much revenue he is putting on the table with his capping of deductions. It sound a bit like the innumerate Romney plan.

[Torie]

Guys, on the medicare thing I made clear that the government would fully pay for the premiums for those who cannot afford a co-pay. If the insurance scheme is inefficient (that is an empirical matter), the  the government can subcontract out the services to HMO's, and again let anyone go elsewhere if they want, but at no additional cost, assuming it does not create risk pool issues. The idea is to maximize choice, but not at the cost of inefficiency or moral hazard for which the government has to pay. We need the HMO thing, to leash the over treatment thing, which is what medicare providers are incentivized to do now, even assuming there were no fraud, which of course their is, or near fraud, for procedures the Docs know are not appropriate really, but do because they can.

This should not be viewed as an ideological issue IMO. It is a pragmatic issue. How does the government get the most bang for its buck, without being ripped off?  I assume The Left does not oppose that does it?

[Torie]

Oh, Obama will fold rather than have 30% of the government shut down. And I don't see why that would be bad for business actually, at least in the short term.

You and Fred Barnes are literally the only people I have seen who think that Dems would be hurt worse by the fiscal cliff than Republicans.

Even the Heritage Foundation called Boehner's offer a "dud."

http://livewire.talkingpointsmemo.com/entry/heritage-experts-call-gop-counter-offer-dud

"[T]he Republican counteroffer, to the extent it can be interpreted from the hazy details now available, is a dud. It is utterly unacceptable. It is bad policy, bad economics, and, if we may say so, highly questionable as a negotiating tactic."

Your link is to a merely conclusory statement. And I don't understand why capping deductions is "bad economics."  But sure, any reasonable structure where deductions are merely capped rather than exorcised will require rate increases. But if you just raise rates on "the rich," you are going to need to slash spending, and slash it hard. Anyway, my anger is more animated by team Obama ignoring the entitlements issue. That is just disgraceful.

[Torie]

Ok, maybe I am not getting how the HMO premium support system would work, but how exactly would it reduce costs in the system? Would it be quite different from the current Medicare Part D free for all? Would only one company be getting Medicare dollars? Because otherwise Hospitals will push them around like they do other insurance companies. Only Medicare can call the shots, because they control such a huge part of their patient population.

The HMO system removes the incentive to over prescribe and over-treat. With the government just paying the bills that are sent in, it can generate an MD feeding frenzy - and does.

[Torie]

If Obamacare intended to cut the costs of entitlements, in this case medical services, then it is even more of a massive failure than I thought. We just have different views of history I guess. But having said that, yes the Pubs demagogued the issue. And to the extent Obamacare really leads to death panels, that is one of its few virtues actually. Trying to cleanse the most soiled hands of either party on this issue set, is even more futile than cleansing Lady Macbeth's damn spot from her sanguinary hand.

[Torie]

Torie also proposes to make major cuts of farm subsidies, which would add a nice piece of change to the government's till and a lot of which go to big corporate operations anyway.  

Take away the farm subsidies and not only will food prices shoot up, but we'd start start importing most of our food. Not a position I want to be in when the Inks hits the fan, as it inevitably does. Much more so than most issues spun as such, food self-sufficiency is a national security issue. I do think thhat we subsidize the wrong foods, but that is neither here nor there,

No. LOL. The subsidies I get are for not growing food. And the ethanol subsidy pushes the price of corn up a couple of dollars a bushel, if not more. So it is precisely the opposite actually.

[Torie]

Torie also proposes to make major cuts of farm subsidies, which would add a nice piece of change to the government's till and a lot of which go to big corporate operations anyway.  

Take away the farm subsidies and not only will food prices shoot up, but we'd start start importing most of our food. Not a position I want to be in when the Inks hits the fan, as it inevitably does. Much more so than most issues spun as such, food self-sufficiency is a national security issue. I do think thhat we subsidize the wrong foods, but that is neither here nor there,

No. LOL. The subsidies I get are for not growing food. And the ethanol subsidy pushes the price of corn up a couple of dollars a bushel, if not more. So it is precisely the opposite actually.

You farm in a universe that precedes the 1996 Freedom to Farm Act? That's a neat trick! And the ethanol thing is stupid. No argument from me on that one.

It's in the CRP program - a conservation program. Its effect is to pay me not to grow crops where they were previously grown. A year ago, I put another field into production, with a view of taking it out of production in 5 years in order to "conserve" it, and get paid more money for conserving than I did for growing corn or beans.

[Torie]

Ok, maybe I am not getting how the HMO premium support system would work, but how exactly would it reduce costs in the system? Would it be quite different from the current Medicare Part D free for all? Would only one company be getting Medicare dollars? Because otherwise Hospitals will push them around like they do other insurance companies. Only Medicare can call the shots, because they control such a huge part of their patient population.

The HMO system removes the incentive to over prescribe and over-treat. With the government just paying the bills that are sent in, it can generate an MD feeding frenzy - and does.

Oh, I completely understand this (and Anvi, I did read your post and you make the same argument). I agree with both of you. But we need to stop this while not diminishing the power of Medicare to get lower rates from providers. We need to switch to a Bismarck model ASAP, with competition between a few extremely large insurance companies for customers. Everyone gets thrown into the same mix, and everyone needs to have insurance. There are subsidies for the olds (like currently) and the poor, while the rest of us pay out of pocket. This is paid for by payroll taxes, so companies have some skin in the game, while not being responsible to pay premiums which rise every year.

OK by me. As I say, this is a pragmatic issue, not an ideological issue. Ideology only kicks in when considering how much the youngs want to/will pay to care for the olds - to wit, just how Draconian will be the triage system? The other ideological issue, is whether rich olds lose all subsidies if they get out of the system, or just have to pay top-up costs to get more, faster, better medical services. That is one of the great underlying ideological divides that nobody talks about, that generates a lot of the controversy which pretends to be about something else, but isn't really. It is kind of the same concept as with school vouchers.