- One way is for the House, Senate, and whatever president we have in 2013 to agree not to make those defense cuts. That's a pretty big stretch. It won't happen if Obama is re-elected. Even with a Republican president, Democratic senators could block moves to void the defense cuts.
- Another way is for the super committee to agree on another plan that the House, Senate, and president all accept.
- They want to reduce the defense spending cuts.
- They want to maintain Bush tax cuts, which are worth $3.7 trillion over 10 years.
- They have no leverage for either of these goals.
The Democrats are now in the stronger position:
- They have largely accepted cuts to Medicare that are capped at 2% a year.
- The debt ceiling deal protected Social Security and Medicaid from cuts.
- They have leverage using defense spending cuts and the expiration of the Bush tax cuts at the end of 2012.
- $250 billion higher tax revenues through limiting deductions if...
- Tax rates are frozen at below Bush tax rates.
The debt ceiling fight was the historic crisis that prompted me to start this blog. If looks even more historic now. It's quite a reversal for the Republicans. I wonder if that's the price they paid for playing chicken, and which Democrat was responsible for that advantageous outcome.
Despite this apparent win for the Democrats, the 2012 election is still up for grabs. I'm not going to predict which party is going to win, or which party is able to spin this to their advantage. So often, it has been the Republicans, so I won't count them out.