Even Without GOP, Obama Could Never Back a Big Liberal Deficit Plan

His self-imposed $1 trillion ceiling means no big plan can be progressive, and no progressive plan can be big.

600 obamapelosireid REUTERS Larry Downing.jpg

Larry Downing/Reuters

We don't know how the debt ceiling debate will turn out, but we do know that the outcome was always going to disappoint those of us who wanted a big budget deal with 50% tax increases, because the White House could never support a deficit plan that was both big and progressive.

To understand why requires one number. One trillion dollars. That how much revenue you can raise over ten years by returning effective tax rates on the wealthiest Americans to their pre-Bush levels. Obama has never given any indication he will go further. In his campaign, he promised no new taxes for anybody making less than $250,000. In office, he said the same thing.

Progressives want a deficit reduction plan that is about 50% higher taxes and 50% lower spending. That means $1 trillion in tax hikes on the rich and $1 trillion in spending cuts.

Deficit hawks, on the other hand, want a plan that cuts about $4 trillion over 10 years. That means if Obama is willing to raise revenue by $1 trillion (again, only on the rich), a good hawkish plan must find $3 trillion in additional cuts to domestic spending and entitlements.

Some have criticized the president for giving Republicans a conservative deficit deal that cuts three to four dollars in spending for every dollar it finds in new revenue. But you can see how the progressive goal of 50-50 and the deficit hawk goal of $4 trillion aren't compatible given Obama's tax pledge. His self-imposed $1 trillion ceiling means no big plan can be progressive, and no progressive plan can be big.



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Derek Thompson is a senior editor at The Atlantic, where he writes about economics, labor markets, and the entertainment business.

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