Why the GOP Will Lose the Fiscal Cliff Battle


Watching the Republican party’s self-destructive pursuit of purity over the fiscal cliff negotiations over the last few weeks gives real meaning to the cliche “cutting off your nose to spite your face.” Because as Phillip Klein points out, if the Bush tax cuts do expire, Obama inevitably wins:

A number of commentators, including myself, have argued that if no deal is reached to avert the “fiscal cliff” and taxes go up on most Americans, then President Obama will be able to structure a massive middle class tax cut in the new year that Republicans would find impossible to oppose. Among the many political implications of such a scenario, one would be that the basket of policies now commonly referred to as the “Bush tax cuts” will suddenly morph into the “Obama middle class tax cut.” In my mind, this would be a major error by Republicans.

Exactly right. Once the Bush tax cuts expire, are they really going to vote against (in the Senate) or attempt to block by not bringing up for a vote (in the House) a bill that would reestablish the tax cuts for all but the wealthiest 2% of Americans? If they do, that would be doubling down on their already damaging way (to themselves, of course) that it would be absolutely perverse. The Republicans have put themselves into a situation where they face two choices: lose little or lose really, really big. But as Klein points out, losing little would actually be a win if they would only recognize it:

Democrats were opposed to both rounds of Bush tax cuts in 2001 and 2003 and have spent a decade blasting them as reckless policy that represented nothing but a giveaway to the wealthy. Yet even though these tax cuts were scheduled to expire after 2010, they were extended an additional two years. And now, they could still preserve 80 percent of them. If 80 percent of the cuts were made permanent, it would forever enshrine the “Bush tax cuts” as major middle class tax relief. Viewed narrowly, allowing rates to go up on those earning more than $250,000 would be a defeat for Republicans. But viewed in a broader context, the fact that a Democratic president coming off of a reelection still has to embrace 80 percent of the dreaded “Bush tax cuts” on the grounds that they’re good for the middle class, could be seen as a victory.

But so far, they’ve got a block of legislators, the ones put in office by the Tea Party movement, that is so obsessively focused on doctrinal purity that they’ve formed a circular firing squad. And to be honest with you, it’s really quite amusing to watch.

Comments

  1. trucreep says

    This is all fine and well, but the fact is most Americans can’t afford a tax increase like this. Hopefully this will wake some people up once they see their paychecks smaller…This stranglehold the Democrats and Republicans have on our government has gone on way too long. These two parties own our government and we have GOT to break loose their grips.

  2. gshelley says

    It does seem crazy. what’s more once they have expired, there is no guarantee they will get the same offer from Obama. If they’d been willing to compromise, they could probably have got a $500000 limit. Once these are gone, if Obama insists on $250000, what are they going to do? vote against tax cuts because they aren’t big enough?

  3. Reginald Selkirk says

    Sure, the Republicans are going to lose. The question is: how much damage will they inflict on the country in the process?

  4. says

    Pah, typical ” tax raise back to what they were then cut some of them again back to what they were slightly later and spend” Democrat party I wouldn’t be surprised if their “new” “tax” “cuts” only applied to The 47% so I’m not going to bother working more to earn more money, as that will bump me up in to a higher tax bracket and then I’ll end up paying even more income tax than the amount I have no idea how much I pay and also I don’t know how tax brackets work and damn hippies and I have nothing against Big Government as long as it’s spent on me and my team of accountants and lawyers and the Sunday morning talkshows and Foxnews tell me the rich get nothing from the government and the young, poor, sick and old get all of it and they should lower capital gains tax which will raise revenue because magic and also we need new submarines to fight Alkader and another thing…

  5. matty1 says

    @1 I am profoundly ignorant on everything connected to economics, can you spell out to me why Americans cannot afford to pay the same tax rates they did in the 1990’s. Is it to do with the economy being so much weaker?

  6. says

    If the cliff happens and we lose the Bush tax cuts, the Republicans won’t be voting for a tax increase, they’ll be voting for a tax cut for those making $250,000 or less. They’ll still be honoring Norquist’s pledge and can point the finger at the Democrats for refusing to compromise. And when the economy still tanks cause they’ll refuse to pass measures that we need (shoring up unemployment insurance, for example) then they can point the finger at the Democrats for refusing to compromise.

    The Republicans need to lose big now. We need to pass the tax cut, shore up what’s needed to keep our economy afloat, and get rid of the goddamned debt ceiling. Cause, oh yeah, in two months that’s gonna be hitting us.

  7. dingojack says

    gshelley – this is the teabagged PoG we’re talking about. Even if all firearms in the US were banned and confiscated they’d still find a way to shoot themselves through both feet, and both hands for good measure.
    Dingo

  8. says

    @Matty:

    It’s not the tax cuts that are the issue. We can easily go back to those tax rates.

    It’s the austerity. Bush Tax Cuts aren’t the only thing on the table. There’s also unemployment insurance, payroll taxes, things like that. If we go over the cliff, those also expire. We’ll have too much austerity too quickly and all the work that’s gone into repairing the US economy will be for nought cause we’re going to go straight from a weak but improving economy into an economic depression – which will be followed by a worldwide economic collapse because so many people buy securities in the US.

  9. says

    If the Republicans lose this battle, it will be almost entirely through self-inflicted wounds. The Democrats don’t seem to be able to hit a barn door from point-blank range.

    The latest news seems to be indicating that the Dems are currently offering tax cut extensions for everyone up to $450k now.

  10. Reginald Selkirk says

    matty1 #5: @1 I am profoundly ignorant on everything connected to economics, can you spell out to me why Americans cannot afford to pay the same tax rates they did in the 1990′s….

    The argument is that if people are paying more of their income to taxes, they are not out spending it in the economy; and knowing they will have a bigger tax bill waiting for them at the end of next year, they will hold back (see “consumer confidence.”)
    .
    I agree with Katherine Lorraine, Chaton de la Mort #9 that taxes are not the most important side of this. Cutting government spending means cutting jobs. That means the unemployment rate, which only recently sunk below 8%, will rise again.

  11. Reginald Selkirk says

    How soon will the new congress be up and running? Will the slight reduction in House Republicans be enough to make that body more tractable?

  12. matty1 says

    Oh if it’s austerity I get it. I know a few people dealing suffering directly from George ‘double-dip’ Osborne’s obsession with cutting spending regardless of the effects.

  13. cottonnero says

    Reginald Selkirk #12: Probably not, since the districts are still gerrymandered and the Tea Party threat of being primaried from the right won’t incline the representatives to work with the Democrats.

  14. says

    This is all fine and well, but the fact is most Americans can’t afford a tax increase like this.

    Really? When was the last time a tax increase caused mass bankruptcy, on either the personal or the national level? We had tax hikes under Reagan, Bush Sr. and Clinton, and none of it made us a poorer nation, or killed economic growth.

    In fact, America was at the height of its wealth, power and liberty at the time when it was most “overtaxed” by tax-and-spend liberal policies. Coincidence? I don’t think so. (And even if it was a coincidence, it still shows that taxes don’t really interfere with prosperity.)

    And in contrast, we just had EIGHT YEARS of Republican tax and spending cuts, and look how many people have gone broke at the end of that “free ride.”

  15. says

    These two parties own our government and we have GOT to break loose their grips.

    “These two parties” together make up a majority of voters. You want to break the majority’s grip on power?

  16. Reginald Selkirk says

    And in contrast, we just had EIGHT YEARS of Republican tax and spending cuts…”

    What spending cuts? They did cut taxes, but increased spending, including splurging on an unnecessary and illegal war.

  17. says

    Ed:

    Bang on the nail.

    Do you think, though, that you could “punch up” the header?

    Something like:

    “Pro-Plutoccracy Pygmy Plenipotentiaries Prepare Phyrric Pyre of Purity.”

  18. John Hinkle says

    But viewed in a broader context, the fact that a Democratic president coming off of a reelection still has to embrace 80 percent of the dreaded “Bush tax cuts” on the grounds that they’re good for the middle class, could be seen as a victory.

    Wouldn’t that be more like the dreaded “<murmur> tax cuts”, given republicans’ reluctance to even mention his dreaded name?

  19. Dennis N says

    Once the Bush tax cuts expire, are they really going to vote against (in the Senate) or attempt to block by not bringing up for a vote (in the House) a bill that would reestablish the tax cuts for all but the wealthiest 2% of Americans?

    Yes, I think they would. They are not beholden to 98% of Americans. 98% of Americans don’t have the excessive cash to max out their campaign donations and then give more to PACs. Also, they feel very secure in their ability to spin it through Fox News and their other legions of media outlets that they are protecting the economic engine that is “job-creators” (what the rest of us call hedge fund managers).

  20. says

    First Mate Bohner: “Captain the ship is sinking! What should we do?”
    Captain Tea Party: “We got to make the ship lighter so it will float.”
    Cabin Boy Reid: “Excuse me that doesn’t actually make sense….”
    Captain Tea Party: “Shut up you muslim-loving homosexual atheist!! We must make this ship lighter!!!”
    First Mate Bohner: “Well, we already threw the women and children over board. What else is left?”
    Cabin Boy Reid: “What about all the solid gold couches? They’re uncomfortable…..
    Captain Tea Party: “Be quite, you sissy boy. First Mate Bohner, dump the life boats. That ought to lighten the load.”
    First Mate Bohner: “We already did that. We did that when we dumped the women and children.”
    Captain Tea Party: “You mean you wasted time loading the women and children into life boats, when there was champaign to be served?”
    First Mate Bohner: {to himself} “Oh, in the boats. I suppose that would have made more sense. Oh well what is done is done. {to the captain} What are we to do?”
    Captain Tea Party: “I have an idea. It’s a brilliant idea! What floats?”
    First Mate Bohner: “The markets due to the invisible hand of capitalism!!!”
    Captain Tea Party: “Beside that. Ice! Ice floats. So if we ram this boat into that iceberg over there, we’ll take on a whole bunch of ice and we will stay afloat.”
    First Mate Bohner: “Brilliant idea. Full steam ahead!”

  21. raven says

    Democrats were opposed to both rounds of Bush tax cuts in 2001 and 2003 and have spent a decade blasting them as reckless policy that represented nothing but a giveaway to the wealthy.

    This caused our current lost generation.

    The idea of the Bush tax cuts was that people would spend the money they didn’t pay in taxes and grow the economy. The tax cuts would pay for themselves.

    It is magical thinking. It failed.

    There are times when tax cuts will pay for themselves. There aren’t many. This wasn’t one of them.

  22. busterggi says

    The GOP needs to get some pot-it notes, apparently they’ve forgotten they drew up the bill that created these tax cuts and it contained the expiration date for 2010 – which they created and approved.

    If they hadn’t wanted them to expire they shouldn’t have put that expiration in there, its their own fault either way.

  23. says

    I don’t really buy these arguments that if the sequestration deal is allowed to stand and the budget cuts go into effect, it will be “too much austerity” and push the economy into another recession. Those cuts amount to less than $100 billion in a $3 trillion budget and a $15 trillion economy (the $1 trillion figure you hear all the time is over 10 years), and a good portion of those “cuts” can be made merely by shifting around some money in many federal departments (at least for the first year). Some of the other things, like the loss of unemployment insurance for two million people, would certainly be painful for many, but that’s not part of the sequestration deal at all. That’s an entirely separate issue, those cuts are expiring quite apart from the other things that are going on.

  24. JasonTD says

    Because as Phillip Klein points out, if the Bush tax cuts do expire, Obama inevitably wins:

    So why would Obama want a deal, then? It looks to me like he’s happy to go over the ‘cliff’ and try and put the blame on the GOP, which seems to be working.

  25. typecaster says

    The GOP needs to get some pot-it notes, apparently they’ve forgotten they drew up the bill that created these tax cuts and it contained the expiration date for 2010 – which they created and approved.

    My understanding is that they had to put an expiration date in if they wanted to pass the bill on a simple majority basis – I think the term is reconciliation. In the Senate, the voting was so close that on one of the tax cuts, Vice-President Cheney had to break a 50-50 tie. If they could have gotten the cuts without the expiration date, they would have.

  26. Eric R says

    Well if the news coming out of the White House is accurate, the Republicans didnt lose and Obama sure as hell didnt win.
    The middle class is now 450k or lower income, sequestration is delayed for two months, coinciding nicely with the upcoming debt ceiling digladiation.

    Obama caved on his 250k ceiling, capitol gains is barely going up (to 20% instead of 39.6), estate taxes barely (with the 5 million trigger, instead of 1 million I believe) Obama didnt get the debt ceiling extension included.

    Two months hence when congress has resolved nothing and we’ve lived through more arguing about “job creators” I anticipate further capitulation by Obama to the nutters.

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