Pig In A Poke

Chris Matthews yesterday was, to say the least, irate over the degree to which the Republican bill in the House is a hollow pretense. He kept screaming at his Republican guest again and again, “Where are the cuts?” and “There’s no cuts.” Then he said guy was being childish, which I thought was pretty rich since it was Matthews who was throwing the tantrum.

Lawrence O’Donnell, however, is quite content with the plan advanced by the “Gang of Six” and endorsed by President Obama, although if it’s any more detailed than the Republican plan that certainly is not evident to me. I’m also not sure how happy I am to have my country being governed by “gangs.” O‘Donnell had Senator Kent Conrad on last night.

On Spending Cuts
There will be $500 billion in spending cuts “immediately” with more to come in future legislation. The immediate cuts are broken down by area, $80 billion from defense for instance, $70 billion from education and labor programs and $11 billion from agriculture programs, but it doesn’t say if that is all in the upcoming fiscal year or if it is a ten-year plan. It also doesn’t say how much is actual decreases and how much is merely reductions of planned increases.

Why the bulk of it is left to “future legislation” is unclear unless, of course, the intention is that the future legislation will never actually be passed.

On Medicare
O’Donnell asked Conrad how they planned to deal with Medicare and he replied that on “Medicare and other health care accounts” they would save $500 billion. O’Donnell followed up by asking if that would come from providers or from recipients and Conrad replied that, “We would say that they should come from providers but ultimately the finance committee will come back with a proposal…” He went on to say that, “We have given them a number that they are responsible to hit.”

So that savings could come in the form of reduced benefits, it could come as increased premiums, it could be a higher eligibility age. We will not know until after the law has been passed committing us to it.

On Social Security
On this one Conrad merely said, “What we have called for is 75 years solvency.” Again, he said that the bill leaves it up to the finance committee as to methods for achieving that. It could be reduced benefits, it could be higher retirement age, it could be reduction if cost of living increases, it could be higher payroll taxes. We won’t know until the law has been passed committing us to it.

On Revenue Increases
The plan calls for reducing tax rates and actually raising taxes by eliminating loopholes and tax dodges, and it eliminates the Alternative Minimum Tax which “is increasingly affecting the middle class.”

I would point out that the AMT has always made the wealthy pay more taxes, so there’s no question about who gains most by its elimination.

Conrad went on at length about how the tax change made business more competitive and yet claimed that the CBO would score it as “a $1.5 trillion tax increase over current law.” That was driving me nuts until someone mentioned that “current law” calls for expiration of the Bush tax cuts. So what this plan calls for is a tax increase, but a smaller one than will happen if current law prevails.

Loopholes are easy to close again, however, one by one without anybody noticing, and than you are left with those lower rates. You don’t really have to lower rates in order to close loopholes.

Further, is this “sweeping and fundamental change in the tax code” going to be hammered out in a few days and passed in time to avoid default? Of course not. This is more of the “pig in a poke.” This is passing a bill that merely announces an intention to do something that may never get done due to later Congressional deadlock.

This “Gang” is the “Gang The Couldn’t Shoot Straight.” The plan they produced is a “pig” and it is very much “in a poke,” meaning we have no real idea what the hell it is.