Why do Democrats always ask for small items when negotiating?

In the looming fiscal cliff, fiscal showdown (gunfight at Fiscal Corral) discussions, the Republican “ask” is a bunch of big-ticket items — roll back social insurance; lower taxes for billionaires; lower taxes for corps (check out the “territorial taxation” proposal sometime); a pony; Santa’s sleigh; Rudolph’s head on a plate.

And the Dem “ask” is — please don’t hurt us too much. By that I mean, don’t cut social insurance; raise taxes on billionaires just “a little”; and the ever-popular “balanced approach” in which our side has to feel pain, or swallow a “bitter pill”. They request a pony; we ask for a bitter pill.

What would a large Dem “ask” look like?

Howie Klein at DownWithTyranny has a great post about the large Dem ask that could have been. I’ll start midway, where he details a conference call he was in. I was also in that call, by the way; his characterization of what we’re up against is accurate (my emphasis and some reparagraphing):

Wednesday I was on a conference call hosted by Rep. Xavier Becerra and Americans For Tax Fairness that discussed the Democrats strategy to win the Grand Bargain battle and, once again, it occurred to me that “our” side was fighting on a battlefield chosen precisely by our mortal enemies.

Republicans should be begging Obama to not raise the margin tax rates to Eisenhower era rates— when top earners paid 91% on the millions they made and the whole concept of sociopathic-criminal plutocracy was a structural impossibility in America. Instead, we’re being prepared for Democrats bartering away pieces of Social Security, Medicare and Medicaid in return for… for what? The temporary Bush tax cuts that are due to expire on December 31 anyway?

Why isn’t the national discussion about hiking the estate tax? Why isn’t it about ending the cap on the Social Security tax and on really growth-positive moves like lowering the age of retirement and expanding Medicare so that everyone is in the pool?

Why isn’t the discussion about taxing all income equally, both what people make from working and what they get from clipping coupons? How about that Wall Street transaction tax and a tax to make hedge fund predators pay their fair share like everyone else?

Obama a socialist? I don’t think so. The Democrats might be a little better– as a party– than the Republicans but, like when Obama says the rich should paid “a little” more in taxes– the phrase “a little” better is the key to [comparing] the Democrats and the Republicans. Look, even criminal fascists like Sheldon Adelson and the Koch brothers are fine with gay marriage and abortions. What they want from the politicians they buy is an economic system that privileges that already privileged and minimizes social mobility, democracy and anything smacking of economic fairness.

Let’s just take the items above. This should (and could) have been the initial Dem “ask”:

■ Eisenhower-era top marginal income tax rate: 90%. Fallback is Nixon-era rate of 75% and no lower. When they bitch about “jobs,” show them the Eisenhower employment numbers, then the Bush numbers, and hold firm. Remember, we hold the aces.

■ Higher taxes on estates. Once the current inheritance tax law expires, the excluded amount will be $1,000,000 and the maximum tax rate on the rest would be 55%. I’d up the “ask” to 60% and make them bargain me down to my floor of 55%. (“OK, you win on this; we’ll just let the current law expire and leave it at that.”)

■ End the Social Security salary cap. Under current law, there’s a payroll tax of 6.2% of wages up to an annual wage maximum ($110,100 in 2012) for Social Security — and no tax on money earned above the maximum. Offer the Begich bill, which ends this cap completely and immediately. Get all 29 Sanders-letter senators to co-sponsor it.

If Social Security still isn’t “secure” enough for its enemies after that change, offer to create a second-tier in the payroll tax rate — to raise the rate from 6.2% to 7% on income over some number, maybe $250,000 or $500,000. Make them wish they hadn’t bitched about it.

■ Lower the retirement age for Social Security back to 65 instead of 67. Or offer to lower it to 64 and settle for 65. When they bitch, say “jobs” — more people out of the work force means more jobs for those who are still in it.

When they bitch about the cost, offer to create a third-tier payroll tax rate (8%, for example) on income over $2,000,000 or so until the full cost is covered. Voilà, Social Security is “saved.”

■ Medicare for all. Blow right past the public option to what the ACA should have been in the first place. Or, if you want to make some money for the system — so it could afford to do more — how about Medicare for all at cost + 5%. Still a huge bargain.

■ Tax capital gains as ordinary income. Period. No more “billionaire tax rates” capped at 15% (before deductions). Same with the carried interest hedge fund loophole — close it.

■ Tax all Wall Street transactions. Add a nickel, or a dime, to every Wall Street transaction. Do it like commissions, so you pay per-share bought or sold, up to a cap. Or don’t. Either way, you don’t have to take a lot on each deal. Even at a penny per transaction you’ll rake in a ton.

And that’s just working from Howie’s list. I’m sure we could sweeten it, but still, it’s a fine one. As I wrote elsewhere, the compromise off of that opening offer would be hugely progressive.

Why don’t our fierce Democratic defenders stake out that position? If the other side says, “No Way,” we say, “Great, see you on January 2, when the 2001 tax cuts expire and the sequester kicks in. We can talk then if you like. Happy holiday, y’all.”

I smell a huge win off this. As I’ve also said, even the geniuses here at La Maison could play that hand; it’s all aces. Thanks, Howie, for seeding the thought. This is exactly right.

Why we can’t have nice things

So why don’t our fierce Dem defenders stake out that strong opening position? Short answer: Because they’re not our defenders, they’re the other guy’s. “Our” Dem defenders are people like Antonio Villaraigosa, who just took a job on the Steering Committee of “Fix the Debt” — which really should be called “The Billionaires’ Loot -the-Safetynet Club”.

I wrote about Villaraigosa earlier, but here’s some more on him and his new best friends by Marta Evry, who covers this stuff at Venice4Change.com (via email; my emphasis):

Villaraigosa has signed on to be the “progressive” front man for a right-wing lobby group whose “core principles” include enshrining the Bush tax cuts for the top 2%, allowing US corporations to offshore their profits tax-free and “reforming” Medicare, Medicaid and Social Security by raising the retirement age and slashing benefits.
Villaraigosa may self-identify as a progressive, but there’s nothing progressive about associating with this group and tactically endorsing their agenda.

Just look at that list of goodies I bolded. None of it is for you.

The corporate offshore tax proposal of theirs is huge, by the way, and getting no publicity at all. It’s called “territorial taxation” and it’s a real snake. For more, read Dave Johnson at Save the Forest.

So that’s what “Fix the Debt” wants — fun fact, Simpson and Bowles are its co-founders. It’s also got 80 CEOs in tow and $60,000,000 to play with. In addition to “liberal,” soon-to-be-ex-Mayor Villaraigosa, it’s loaded with guys you may have heard of — like this MSNBC regular (my emphasis; note: co-chair):

Governor Ed Rendell
Co-Chair, Campaign to Fix the Debt

Edward G. Rendell was the 45th Governor of the Commonwealth of Pennsylvania. Governor Rendell has also served as Mayor and District Attorney of the City of Philadelphia. From 2008 to 2009, Gov. Rendell was Chair of the National Governors Association. He served as General Chair of the Democratic National Committee during the 2000 presidential election. Gov. Rendell, along with New York Mayor Michael Bloomberg and former California Gov. Arnold Schwarzenegger, founded Building America’s Future, a national infrastructure-investment coalition. Governor Rendell is a graduate of the University of Pennsylvania and of the Villanova Law School and served in the United States Army.

Tells you all you need to know about “Building America’s Future,” right? And on the Steering Committee with Villaraigosa, we find these Democrats and Obama associates (plus one World Bank guy):

Steven Rattner
Chairman, Willett Advisors LLC

Steven Rattner is Chairman of Willett Advisors LLC, the investment arm for New York Mayor Michael R. Bloomberg’s personal and philanthropic assets. In addition, he is a Contributing Writer for the Op-Ed page of The New York Times, the author of a monthly column for the Financial Times and the Economic Analyst for MSNBC’s Morning Joe. Previously, Mr. Rattner served as Counselor to the Secretary of the Treasury for the Obama Administration. Until February 2009, Mr. Rattner was Managing Principal of Quadrangle Group LLC, a private investment firm. Before beginning his investment-banking career, Mr. Rattner was employed by The New York Times for nearly nine years, principally as an economic correspondent in New York, Washington and London. Mr. Rattner graduated in 1974 from Brown University with honors in economics.

Alice M. Rivlin
Co-Chair of the Debt Reduction Task Force at the Bipartisan Policy Center

Alice Rivlin recently served as a member of the President’s Debt Commission. Dr. Rivlin became the founding director of the Congressional Budget Office in 1975 and served until 1983. She was director of the Office of Management and Budget in the Clinton administration. Later she was a governor and vice chair of the Federal Reserve. Currently, she is the director of the Greater Washington Research Program and senior fellow of Economic Studies at The Brookings Institution. On December 16, 2011, Rivlin released a premium support reform plan for Medicare with Pete Domenici, her co-chair at the Bipartisan Policy Center. She is also a visiting professor at the Public Policy Institute of Georgetown University.

Ambassador Robert Zoellick
Former President of the World Bank

Robert B. Zoellick is the former 11th President of the World Bank Group, which works with 187 member countries. Prior to joining the Bank, Mr. Zoellick served as Vice Chairman, International of the Goldman Sachs Group, Managing Director, and Chairman of Goldman Sachs’ Board of International Advisors from 2006-07. In 2005-06, Mr. Zoellick served as the Deputy Secretary of the U.S. State Department. From 2001 to January 2005, Mr. Zoellick served in the U.S. cabinet as the 13th U.S. Trade Representative. He has also served as Executive Vice President of Fannie Mae and as Deputy Chief of Staff at the White House. Mr. Zoellick graduated Phi Beta Kappa from Swarthmore College in 1975 and has earned a J.D. magna cum laude from the Harvard Law School and a MPP from the Kennedy School of Government.

And can’t close the Steering Committee list without noting this bright fellow (last name should tell you all, but check the credits):

Michael Peterson
President and COO, Peter G. Peterson Foundation

Michael Peterson is President and Chief Operating Officer of the Peter G. Peterson Foundation. In addition, Michael is currently President and Co-Founder of GPX Enterprises, LP, a private investment firm focused on the sponsorship, development, and management of selected private equity investments. He worked on the Clinton and Dukakis presidential campaigns, served as a Congressional Aide to Majority Leader Richard Gephardt, and conducted research for both the Committee for Economic Development and the Institute for International Economics. After studying public policy and graduating magna cum laude and with honors from Brown University, Michael earned a Master’s degree in Economics from the London School of Economics.

The whole Fix the Debt perp list is here (national leaders) and here (state-level leaders).

These are just a few of the “liberal” Democrats who want to “fix the debt.” Bankers, economists, writers, and a Peterson heir. There are Republicans on these lists as well, but the Dem side has Obama written all over it — Simpson, Bowles, Rivlin, Rattner, all with ties to the Obama White House.

So back to our original question. You tell me — why don’t our fierce Dem defenders stake out that strong opening position? Maybe because they don’t work for you. Maybe because they work for Goldman Sachs and the World Bank and Pete Peterson, and everyplace else in the world where money collects like pond scum — and where their next paycheck will come from. What do you think?

Is Antonio Villaraigosa auditioning for his next job?

I want to end with a question about Antonio Villaraigosa. He’s got some liberal cred, and claims to be an “progressive abashedly“. Many who work on my side of the fence actually like him. So what made him do this — join that steering committee? 

Maybe the clue is in my “next paycheck” comment above. Did Mayor Villaraigosa join “Fix The Debt” because he is looking for a new job? Remember, he’s term-limited out of office in 2013. What’s his next landing field? Governor? Senator? Neither of those positions will come open anytime soon, according to Robert Cruickshank, who writes about California politics at Calitics.com (via email):

He [Villaraigosa] does have higher ambitions, whether for the governor’s office or the US Senate. But neither seat is coming open anytime soon. Jerry Brown is likely to run for re-election in 2014, and will have no trouble defeating his Republican opponent. So either Barbara Boxer retires in 2016, or Villaraigosa runs for governor in 2018 against Gavin Newsom and AG Kamala Harris.

That leaves two other choices — something with the Obama administration, or something with some money behind it, like lobbying, banking or private equity. As to the second alternative, what better way to “polish his résumé” than with this kind of move? Swim with the big boys, get hired by the big boys.

And as to the first alternative (working with Obama 2.0), it’s scary to think that his Fix the Debt move might have the same sweetening effect.

I guess we’ll find out what Obama thinks of that kind of résumé-polish when he finally cuts his deal. Grand Bargain or Grand Betrayal? I can’t wait to find out.

But whatever Obama hands us, it certainly won’t be to the left of our “please do nothing bad” request. Please Do Nothing Bad is the left-most position on the table right now. Looks like someone else will have to put Howie Klein’s great list into the discussion.

UPDATE: Did you miss this? Paul Krugman didn’t. A deal could be taking shape as we speak.


To follow or send links: @Gaius_Publius

Gaius Publius is a professional writer living on the West Coast of the United States.

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