By Paul Krugman
June 28, 2011 | New York Times blogs
So, here's where we are on the debt limit discussions: Democrats have agreed to large spending cuts, but are holding out for doing something about
a rule that lets businesses value their inventory at less than they bought it for in order to lower their tax burden, a loophole that lets hedge-fund managers count their income as capital gains and pay a 15 percent marginal tax rate, the tax treatment of private jets, oil and gas subsidies, and a limit on itemized deductions for the wealthy.
And Republicans walked out.
Think about it. There's a significant chance that failing to raise the debt limit could provoke a renewed financial crisis — and Republicans would rather take that chance than allow a reduction in tax breaks on corporate jets.
[Don't forget tax breaks for yachts and thoroughbred horses, and taxpayer-funded subsidies for mega-profitable oil and gas companies! - J]
What this says to me is that Obama cannot, must not, concede here. If he does, he's signaling that the GOP can extract even the most outrageous demands; he's setting himself up for endless blackmail. A line has to be drawn somewhere; it should have been drawn last fall; but to concede now would effectively mean the end of the presidency.