Or John Boehner's gift to Barack
Or the fiscal cliff is coming and you better be nice. Or we're all getting coal for Christmas. Or the Senate wants in on what may end up a Christmas with no gifts, at all. Or the Senate doesn't really want any part of Christmas. Or something.
To recap. Obama told Boehner that he is willing to settle for tax increases on households earning $400,000 or more, and might be willing to adjust cost-of-living increases for Social Security, maybe.
Boehner, thinking that he couldn't sell such an agreement to House Republicans, decided to test his own leadership by proposing legislation that would maintain most of the Bush tax cuts and increase taxes only for households making one million dollars or more. Feedback from his caucus persuaded Boehner that he would suffer legislative defeat on the proposal, a definite embarrassment for the speaker. So, he decided to humiliate himself by pulling his proposal without a vote and go home to Ohio. His last words were something like "let Harry (Senate Majority Leader Reid) do it."
Maybe that is Reid's Christmas wish, but it didn't sound like it when his Democratic colleague, Sen. Charles Schumer, said, "we're not going to want to come to a deal if we know Boehner isn't going to move it in the House."
Anyway, Senate Republicans have the filibuster to use against any deal. And, in comments reported by the Washington Post on Saturday, Senate Minority Leader Mitch McConnell sounded like he agreed with Schumer's statement. No enthusiasm for leadership there.
Still, though it seems improbable, there might be enough Republican votes in the Senate to shut down a filibuster. It would take seven Republicans to do so and, probably, a fiscal cliff deal that doesn't protect the wealthy as much as Boehner has sought to do, reduces some scheduled cuts to the Pentagon budget, and cuts Social Security COLA increases a bit (maybe including protection for low-income recipients). To complete the deal would then take support from all House Democrats and 17 House Republicans, or some mix of the two caucuses that adds up to 218 votes in the House.
Not only does such a deal seem improbable, it would leave larger budget cuts, stimulus spending, further revenue increases, and an increase in the authorized national debt to be negotiated by the same parties in January. Failure to address everything on the table in a satisfactory way means reduced unemployment benefits for long-term unemployed, tax increases for low- and middle-income earners and steep cuts for social programs. The Obama administration can take certain steps to put off the impact of some tax increases and spending cuts, but those steps likely will not do much to keep the stock market from tanking, or to prevent business investment and hiring from dropping significantly, or to avoid dropping back into recession.
So what seems likely to be the outcome of all of this? One of the following, I think:
Either,
1. Obama turns out to have been more clever than most people thought. Polls show that a significant majority of Americans will blame Republicans more than Democrats for failure on the fiscal cliff. This may well be a large part of Obama's willingness to hold out for a deal that protects low- and middle-income households, extends unemployment benefits and includes new stimulus spending. He gets some of this stuff in a proposal that passes the House and Senate between Christmas and New Year's and enters 2013 looking like a leader with an ability to get more of what he wants from demoralized Republicans.
or
2. Obama turns out to have been more of a compromiser than Democrats want and gets Republican votes in the House and Senate for a deal that gives up too much on entitlements and leaves extreme right-wingers in Congress feeling like they can still wag the dog. He enters 2013 with little chance of protecting social spending from further cuts and having to give in further to get congressional Republicans to raise the debt ceiling.
or
3. Obama holds the line and we dive over the cliff, causing a certain amount of economic panic as we enter 2013. Republicans will get the lion's share of the blame for the damage, but will be consoled by the ability to vote for tax cuts as part of any eventual agreement. It will be too late to prevent the collateral damage that will fall primarily on working folks and communities of color in the first quarter of the year.
or
4. Right-wing Republicans continue their zealous campaign to cripple the federal government throughout 2013 and turn the legislative session into trench warfare, insuring deeper recession and, likely, the longest mid-term election campaign in history. Even a shockingly large Democratic victory in the 2014 elections will do little to immediately relieve the longest and deepest economic downturn in American history. European and Asian economies will suffer even worse.
or
5. Mutated combinations of some or all of the above are possible. The actual outcome could be an either more or less disastrous hybrid and almost certainly a sterile one.
Merry Christmas, or something.
Showing posts with label cliff diving. Show all posts
Showing posts with label cliff diving. Show all posts
Saturday, December 22, 2012
Wednesday, December 5, 2012
Cliff diving
Fiscally speaking, Obama's position only gets stronger
Why shouldn't President Obama demand Republican support for ending Bush-era tax cuts for the rich? Because if he doesn't find a way to compromise with John Boehner and Mitch McConnell, we will all go over the fiscal cliff?
The truth is Republicans have stronger reasons to avoid the cliff than Obama does and, surprisingly, many more reasons to go over it, as well. Either way, they face political damnation.
If we do take a dive, Boehner and McConnell know that Republicans will get the major portion of the blame. Their refusal to compromise will be portrayed as protecting lower tax rates for the rich. No amount of explaining will change that perception.
Obama will be criticized, too, but not as harshly, and he doesn't have 2014 election worries, either. Republican incumbents (House or Senate) planning on running for reelection will begin their campaigns fearing that intransigence on the fiscal cliff (and the debt ceiling, if it comes to that) will cost them politically.
Theoretically, going over the cliff will position Republicans to reach a "grand bargain" in January that includes tax cuts. The new year will create incentives for both sides to reach a compromise that restores some of the Bush-era tax cuts (except for high-income earners) and maintains the payroll tax exemption that will disappear at year's end.
A January compromise will allow Republicans to claim that they remain the party of tax cuts. Unfortunately for them, to get the cuts that will help maintain their brand (even though Democrats will want them, too), Republicans will likely have to agree with healthcare reforms that they have always opposed, like allowing the government to require competitive bidding for medical equipment and other items purchased by federal health-care programs.
Medicare and Medicaid reforms outlined by the Center for American Progress and generally supported by Democrats are projected to save $385 billion over 10 years, without affecting eligibility or benefit levels. Republicans have their own proposals for saving billions more in healthcare spending, but most of them come from delaying eligibility and raising costs for recipients. The credit for such reforms will go to Obama, not to Boehner, Ryan, Cantor, McConnell, et al.
That same Republican leadership will want to restore some of the cuts to the military budget that will result from going over the fiscal cliff and Democrats will want to do some of that, also. But they won't want it worse than the Republicans will and will be able to bargain for other things they want more, like a little bit more stimulus spending and reduced cuts in education and human service spending.
All of that compromising is going to make Republicans look weak to their core constituencies. It's a painful prospect; agree to tax increases to avoid going over the fiscal cliff and tarnish their anti-tax, anti-government brand, or strengthen the perception that they are defending tax cuts for the rich and agree to a compromise afterward that makes them look like a junior partner in supporting handouts to Democratic constituencies.
The only possible basis for Democrats to oppose going over the cliff is the possibility that doing so will result in instant and significant damage to the economy. (Just three weeks ago in Compromise or Betrayal, I did advocate compromising with Republicans before going over the fiscal cliff. What can I say? Like Obama on gay marriage, my thinking has evolved.)But there are all sorts of ways the government can blunt the immediate effects of tax increases and sequestration, delaying the pain for long enough to pass a fix in January. Obama has lots of cards to play now. After the cliff dive is done, his hand will be even stronger.
Why shouldn't President Obama demand Republican support for ending Bush-era tax cuts for the rich? Because if he doesn't find a way to compromise with John Boehner and Mitch McConnell, we will all go over the fiscal cliff?
The truth is Republicans have stronger reasons to avoid the cliff than Obama does and, surprisingly, many more reasons to go over it, as well. Either way, they face political damnation.
If we do take a dive, Boehner and McConnell know that Republicans will get the major portion of the blame. Their refusal to compromise will be portrayed as protecting lower tax rates for the rich. No amount of explaining will change that perception.
Obama will be criticized, too, but not as harshly, and he doesn't have 2014 election worries, either. Republican incumbents (House or Senate) planning on running for reelection will begin their campaigns fearing that intransigence on the fiscal cliff (and the debt ceiling, if it comes to that) will cost them politically.
Theoretically, going over the cliff will position Republicans to reach a "grand bargain" in January that includes tax cuts. The new year will create incentives for both sides to reach a compromise that restores some of the Bush-era tax cuts (except for high-income earners) and maintains the payroll tax exemption that will disappear at year's end.
A January compromise will allow Republicans to claim that they remain the party of tax cuts. Unfortunately for them, to get the cuts that will help maintain their brand (even though Democrats will want them, too), Republicans will likely have to agree with healthcare reforms that they have always opposed, like allowing the government to require competitive bidding for medical equipment and other items purchased by federal health-care programs.
Medicare and Medicaid reforms outlined by the Center for American Progress and generally supported by Democrats are projected to save $385 billion over 10 years, without affecting eligibility or benefit levels. Republicans have their own proposals for saving billions more in healthcare spending, but most of them come from delaying eligibility and raising costs for recipients. The credit for such reforms will go to Obama, not to Boehner, Ryan, Cantor, McConnell, et al.
That same Republican leadership will want to restore some of the cuts to the military budget that will result from going over the fiscal cliff and Democrats will want to do some of that, also. But they won't want it worse than the Republicans will and will be able to bargain for other things they want more, like a little bit more stimulus spending and reduced cuts in education and human service spending.
All of that compromising is going to make Republicans look weak to their core constituencies. It's a painful prospect; agree to tax increases to avoid going over the fiscal cliff and tarnish their anti-tax, anti-government brand, or strengthen the perception that they are defending tax cuts for the rich and agree to a compromise afterward that makes them look like a junior partner in supporting handouts to Democratic constituencies.
The only possible basis for Democrats to oppose going over the cliff is the possibility that doing so will result in instant and significant damage to the economy. (Just three weeks ago in Compromise or Betrayal, I did advocate compromising with Republicans before going over the fiscal cliff. What can I say? Like Obama on gay marriage, my thinking has evolved.)But there are all sorts of ways the government can blunt the immediate effects of tax increases and sequestration, delaying the pain for long enough to pass a fix in January. Obama has lots of cards to play now. After the cliff dive is done, his hand will be even stronger.
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