Monday, December 3, 2012

No the Fiscal Cliff Has not Hit a 'Stalemate'

      This hasn't prevented much of the media to go into full hand-wringing, consternation mode. And there are still some bedwetting liberals too. Josh Marshall had this funny quote from David Gergen-not a liberal, of course:

      "David Gergen says that John Boehner is being surprisingly reasonable. Democrats and the President are overplaying their hand and their recalcitrance may poison relations between the parties.

      "The gist of Gergen’s argument is that it should be enough from Republicans that they show any flexibility on tax hikes at all since they haven’t even entertained the idea for 22 years.

      "Some of the best passages from the piece …
In a breakthrough, House Speaker John Boehner quickly lined up behind the idea of the wealthy paying more. He still disagrees with the president on how to get there, of course, but critics are losing sight of how far Boehner seems prepared to go.
But there is now a danger of over learning that lesson, becoming so combative and rigid that good faith negotiations become almost impossible. Old White House hands from the GOP side — people who like our Presidents to succeed —are privately warning that if the White House and allied Democrats keep pushing so hard-fisted on deficits, Susan Rice and Senate filibuster rules, relations with Republicans on the Hill will become even more poisonous in the next four years than in the past.

     Marshall had the perfect title for that "Gergen taking full advantage of pot legalization." The GOP of course hasn't offered any compromises-cutting loopholes is something they've talked about for years and that Romney ran on-the fellow who lost the election.

      Yet a TPM reader worries. He's the bedwetting liberal I mentioned. Here's what GR thinks:

       "While I don’t agree with Gergen’s reasoning, I think that he is on to something. Krugman’s blog post today is closer to what I think is going to happen - nothing but a tantrum.

       "The House of Reps has no incentive to cave or bargain in good faith. The vast majority of them are in very safe districts and I dare say that at least a critical mass of them are true believers who see compromise as a violation of one of the Commandments. I doubt that many of them see any positive to themselves or, in the deluded minds of the TeaFolk, the country, in settling. These folk honestly believe that capping the debt crippling governemnt is an inherently good thing and they are probably willing to pay the price of a few percentage points in tax hikes to which they can feign outrage on the stump."

       "Yes, rates will go up, but the removal of a few percent of GDP from the economy will also be triggered and the few chess players of the GOP who are left probably believe that the potential recession will be blamed on Obama."

       "I don’t see this as a clear path to a policy triumph for Obama. Instead I see it as the beginning of a minimum two year turmoil."

          The question begs then if the Democrats have to be afraid to fight now when won't they be? The just won the Presidency by 4.5 million votes and the Senate by 13 million while actually wining the House by 540,000. I mean what's the point of even electing Democrats if they can't put forward a perfectly reasonable proposal that the American people agree with?

           For one thing, polls show that by sizable majorities people will blame the Republicans if this doesn't happen. Then again, there is a case that the impact of going over the fiscal cliff really isn't going to be as dire as you might think.

           According to Evan Soltas, the impact of the  expiration of all the tax cuts would be progressive as the Bush tax cuts were sharply regressive:

            "The Bush tax cuts were sharply regressive -- that is, people with high incomes benefited far more as a percentage of their income. The expiration of the cuts would be correspondingly progressive, with large increases in the tax burden on high-income and wealthy families and individuals."

             "If all the tax cuts were allowed to expire, after-tax income of the lowest income quintile will fall 0.5 percent, and the middle-income quintile's income will decline 2 percent. For the top-income quintile, however, after-tax income will fall by $7,119, or 4.1 percent. And the top 1 percent by income bears the brunt of the change, paying an extra 6.4 percent of income, or $70,746."

            Indeed, as they were so regressive, it's ironic that the Dems have staked their ground on making the majority of them permanent. Ultimately if we go over, are the Republicans going to refuse to support a January Democratic bill to cut taxes for 98% of taxpayers?

            That's the thing to keep in mind: the vote will not be a vote whether or not to raise taxes on the top 2%, but whether to cut them for the 98%. I believe that refusing to do so would be difficult for any GOP Rep no matter how conservative his district. We've already seen that it's possible for things to happen that harm even Right wingers in safe districts-Akin and Richard Mourdock-and that this contaminates the entire GOP brand not just individual races.

              In any case, the GOP could to an extent save Bush's legacy if most tax cuts are made permanent. Would they honestly stop this from happening out of pique that those for the wealthy aren't being renewed?

               If the GOP even in this disgraced and defeated state calls the shots, then they have such a deep power of our country that elections are simply pointless. Obviously their power is not quite that big and mysterious. They can be beaten and this time they are going to lose. They can do it the hard or the easy way but it's going to happen.

               For just how disgraced and defeated they are, see here


               While as we saw above even if we went over the cliff it's likely manageable, speaking for myself, I'd take a recession if it finally released us from the grip of these GOP flatearthers. As Krugman has said the ability of the Republicans to hold the nation hostage simply has to stop. While we don't need anymore recession we need even less the political dysfunction we've had in recent years-and which is the proximate cause of the recession anyway.

                 This is not a stalemate. A stalemate is with two parties of roughly equal power. The voters clearly have empowered the Democrats where they weren't obstructed by GOP gerrymandering. If the Dems fail to use this power for the purposes the electorate gave it to them for, they will be derelict. Everything we've seen suggests the Democrats will not mess it up this time.


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