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Obama Floats the Inevitable -- Debt Deal With All Cuts, No Revenues

July 21, 2011 - by Donny Shaw

If this NYT report is accurate, then congressional Democrats, led by the Obama Administration, are lined up for another epic cave in. The Republicans, on the other hand, are looking poised to score yet another big victory. First, the Bush tax cuts extension, then the 2011 spending bill cuts, and now a debt-ceiling deal that would reduce the deficit entirely through cuts to social spending.

The Obama administration has informed Democratic Congressional leaders that President Obama and SpeakerJohn A. Boehner were starting to close in on a major budget deal that would enact substantial spending cuts and seek future revenues through a tax overhaul, Congressional officials said Thursday.

With the government staring at a potential default in less than two weeks, the officials said the administration on Wednesday night notified top members of Congress that an agreement between the president and Mr. Boehner could be imminent. The Congressional leaders, whose help Mr. Obama would need to bring a compromise forward, were told that the new revenue tied to the looming agreement to increase the debt limit by Aug. 2 would be produced in 2012 through a tax code rewrite that would lower individual and corporate rates, close loopholes, end tax breaks and make other adjustments to produce revenue gains.

Officials knowledgeable about the conversations between the administration and Congressional leaders said the details of the potential package remained unknown but they presumed it would include cuts and adjustments in most federal programs, including Medicare.

So, debt ceiling goes up in exchange for trillions of spending cuts ($3.5 trillion according to Swampland) and lip service on tax revenues in the future. Because, you know, raising taxes and closing loopholes is going to get way easier after this. Right. As an aide who spoke with TPM on this said, the deal is “all cuts,” “maybe some revenues in the future.” 

Of course the White House and Boehner’s office are denying that any such deal exists. But this is just too believable to dismiss. With both the McConnell-Reid plan and the bipartisan Senate plan basically dead for their own reasons, how else could this play out? We know that a deal needs to be struck now in order for legislation to be drawn up and passed before August 2. It’s crunch time, which means it’s time for the Democrats to roll over. Just another sign here that if there is a progressive movement in the U.S., the Democrats in Washington, D.C. are not feeling it.

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