Obama Question MarkEzra Klein reported this afternoon and then again this evening on The Rachel Maddow Show, that a debt ceiling deal is all but done: the president will take a top marginal tax rate of 37% and raise the retirement age to 67. It sounds outrageous, but Klein makes a compelling case, even though it is very much akin to tea leaf reading. Basically, he's saying that Obama used to always say the top marginal tax rate must go back up to the Clinton levels and now he is signaling that he would take less. But this isn't new. I noticed right after the election that Obama had started saying that income over a quarter million must be taxed more—specifically neglecting to mention how much more. So this isn't some sudden change.

Also note that Ezra Klein was completely wrong a couple of weeks ago when he said that Fiscal Cliff negotiations were all but done—right before the Republicans made a week long show of how there was no progress on the negotiations. So I'm not at all certain that he is right. But as I said, he makes a compelling case. And if he is right, this is really bad.

Paul Krugman wrote early this evening exactly what I think:

First, raising the Medicare age is terrible policy. It would be terrible policy even if the Affordable Care Act were going to be there in full force for 65 and 66 year olds, because it would cost the public $2 for every dollar in federal funds saved. And in case you haven't noticed, Republican governors are still fighting the ACA tooth and nail; if they block the Medicaid expansion, as some will, lower-income seniors will just be pitched into the abyss.

Second, why on earth would Obama be selling Medicare away to raise top tax rates when he gets a big rate rise on January 1 just by doing nothing? And no, vague promises about closing loopholes won't do it: a rate rise is the real deal, no questions, and should not be traded away for who knows what.

So this looks crazy to me; it looks like a deal that makes no sense either substantively or in terms of the actual bargaining strength of the parties. And if it does happen, the disillusionment on the Democratic side would be huge. All that effort to reelect Obama, and the first thing he does is give away two years of Medicare? How's that going to play in future attempts to get out the vote?

He's completely right. If Obama does this it will indicate that he's been playing us all along. He talks pretty, but he is nothing close to liberal. I wish I weren't so cynical that I didn't believe it entirely possible.

And note that Ezra Klein shows very clearly what bullshit is this whole business of changing the Medicare eligibility age in this clip from tonight's show:


Ezra Klein had Peter Orszag on the show tonight. I was taken by the fact that he said that Democrats should be in favor of privatizing Social Security. He also happens to be a Vice Chairman of Global Banking at Citigroup. You know, a company that stands to make a fortune if Social Security is privatized. But no mention of this is made. Orszag worked for Obama, so of course he's a liberal. And he has the kind of face you just want to punch the shit out of.

Update (8 December 2012 12:19 am)

The more I think of this, the more I think that Ezra Klein is wrong. It might be that Obama is putting out signals that he would compromise on Medicare or tax cuts for the rich. But I can't believe that Obama wouldn't give these things up for nothing. Taking 37% top tax bracket (which is not even splitting the difference) is a compromise. What is Klein suggesting that the president is getting for this: raising the Medicare eligibility age? That makes no sense at all.