Getting Out Of The Box

President Obama said yesterday that the House Republicans are in a box.  I agree.  I have argued in this blog for a long time the errors in their debt ceiling strategy.  They are like a running back in a football game that has broken through the defensive line and secondary and is 10 yards away from any defender and 10 yards from the end zone...and fumbles the ball.

Of course, President Obama has not boxed himself in because he never even got close to a box.  He never put anything on the table.  It is tough to box yourself when you never get close to the box.  The House Republicans should never have let him get away with that.

There is a meeting today in The White House beginning at 10am.  It is unbelievable that Washington can be this dysfunctional that with a debt ceiling deadline looming in a little over a week the House and Senate are both in recess for the weekend.  And all of this is left to some back room dealings.

It is what it is.  Negotiations like this are like the battlefield in a war.  It is ever changing.  It does no good to dwell on "what ifs".  It is all about "what now?".  It is also takes a will to say "why not!".  This still can get done and it still can be a win for the American People.

What can be done by the House Republicans right now?

I don't think they have any way out of agreeing to a revenue increase in form if not in substance.  I have stated that from the beginning.  It is all about perception as I have said before.  Taking the position they did made them look unreasonable in the eyes of most Americans.   They also failed in not understanding the trade-offs.

Republicans would like to see meaningful spending reductions.  At the end of the day what would most people consider a better deal? $1 trillion in spending cuts with no tax increases or $5 trillion in cuts with $1 trillion in spending.

My suggestions for the House Republicans in dealing with President Obama.

• Offer to raise revenues $1 dollar for every $5 dollars in spending cuts President Obama offers in public.  No revenue increase could take effect until at least half of the spending cuts were in place.  The revenue increase would be accomplished by a tax reform package that would lower the marginal rates and broaden the tax base.  Tax reform would not become effective until half the spending cuts were in place.  If the tax reform measure did not increase revenues to at least 18.5% of GDP by the time the $6 in spending cuts were fully implemented, rates could be raised across the board to meet this revenue target.

• If this fails with the President to produce an agreement, challenge the Senate to pass a spending cut package equal to 5/6 of the debt ceiling increase that is desired.  The House will then pass a tax increase equal to 1/6 of the debt ceiling increase.  This also is the way the Constitution is supposed to work.  

These are quick thoughts off the top of my head.  There have to be a lot more good ideas keeping several key principles in mind.  They should also be clearly laid out to the American people as what the Republicans have offered as compromises to the President to get to a deal.

1. There must be deficit reduction equal to or greater than any debt ceiling increase.  (The House Republicans got this right).
2. Revenue increases will be part of the solution but only if spending cuts are in the bank first.
3. There must be $5 dollars in spending cuts for every $1 in revenue increase
4. Any revenue increases should broaden the tax base and lower marginal rates 

  It is not too late to pick up the fumble.  The ball is still sitting on the field waiting to be picked up.