Yglesias: Gang Of Six Proposal Raises Much More Revenue Than Deal John Boehner Already Rejected

Important nuance from Bob Greenstein at the CBPP who notes that the $1 trillion in new revenue from the Gang of Six plan isn't the same as the $1 trillion in new revenue from the "grand bargain" talks between President Obama and Speaker Boehner. In particular, the Gang of Six plan assumes the expiration of the high-end Bush tax cuts and then adds $1 trillion in revenue. The deal Boehner rejected merely assumed $1 trillion in revenue over a baseline that assumes all Bush tax cuts are made permanent. That furthers my impression that this proposal will be DOA in the House once House members understand it.

However, it's also worth emphasizing an additional point here. The quantity of revenue that Obama is trying to get the GOP to agree to provide is less than the amount of revenue he could get simply by vetoing any extension of any aspect of the Bush tax cuts. Obama’s not doing that because he wants to fulfill his campaign pledge to permanently extend much of Bush’s tax package, and he’s not doing it because he wants to get Republicans to vote for tax increases rather than do it unilaterally. But if the goal here is just to obtain revenue, the best way to do it is with the veto pen rather than the bargaining framework.

Specifically, the plan calls for either $383 billion or $500 billion in cuts in these programs over ten years, with $298 billion of them earmarked to offset the costs of permanently fixing the flawed “sustainable growth rate” (SGR) provision of Medicare law that requires deep cuts in payment rates to physicians (which Congress has canceled each year to keep them from taking effect).

The $383 billion figure is close to the figure for this category of cuts in the Bowles-Simpson deficit reduction plan — as are most figures in the Gang of Six proposal. Some news accounts reported that Senator Coburn rejoined the Gang in return for an additional $117 billion in health care cuts. Those reports are inaccurate. Instead, the Gang agreed to show both the lower number and the higher number that Coburn favors — and to agree to disagree on this issue. That’s why two figures, about $117 billion apart, appear throughout the Gang of Six’s documents.