Monday, July 25, 2011

The Hill: Bill would force Obama to pay Social Security, military if US defaults

Tea Party conservatives hope to make a push on the House floor to force President Obama to avoid a national default if Congress fails to raise the debt limit.

I'd say the chance of default is low at this point.  Most likely, a deal will be made.  If you consider that the 2.7 trillion offer by Reid is about the same money that Obama was talking about, then consider that it is without the tax reform that Boehner thought they had with Obama before he "moved the goalposts", then you can see it is, from the numbers, about the same deal.  However, there's no entitlement changes, most likely, and no increase in taxes either.  Nor in tax collections that were expected from the tax reforms.

There's no way that you are going to get the Democrats to give up some entitlement spending without getting taxes.  That explains the goal post moving by Obama.   The higher taxes were an absolute necessity for them to accept the cuts (if they really were they way they appeared).  Boehner won't get the tax reform either, because the Democrats are ideologically opposed to lower rates even if it means higher tax collections.  That's what Obama once said about capital gains.  He said he would still prefer higher rates even if tax collections are less because that would be more fair.  Therefore, the Democrats can never accept lower rates and lower spending.  Won't happen.

Hence, the cosmetic deal that appears to do much, but does little.  It's all a tempest in a teapot.

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