Tuesday, December 4, 2012

The Fiscal Cliff: Where Do We Go From Here?

     Boehner and his GOPers finally made an offer, It's not a very good one and even leaves out some important details-like when does the $800 billion in revenue they claim their closing of unspecified deductions kick in? Not only do they not tell us what the deductions are, they don't tell us when they start.

     GOP finally makes an offer

     Nevertheless, it was an offer and it moves the process forward. While it's not much, it's an improvement over the previous status quo where the GOP wanted Obama and the Dems to make their entitlement cuts for them.

     And, at the end of the day, there seems to be reason to suspect that the GOP will end up accepting the increase in top tax rates. The writing seems to be on the wall and today prominent conservative Byron York said as much:

    "Republicans will cave on the question of raising the tax rate for the highest-income Americans. The only question is whether they do so before or after the government goes over the so-called fiscal cliff."

     "First, many in the GOP do not believe that raising the rate on top earners from 35 percent to 39.6 percent (the rate before the Bush tax cuts) would seriously damage the economy. Second, they know that most Americans approve of higher taxes on the top bracket, and President Obama, having campaigned and won on that platform, seems dead-set on higher rates. Third, they fear that if the government does go over the cliff and Democrats propose re-lowering taxes for everyone except the highest earners, Republicans would be in the impossible position of resisting tax cuts for 98 percent of the country on behalf of the top 2 percent."

     It seems to me that this is where we really are. The Republicans are going to cave. The question is when? They need to wait, probably for the last minute. If I were to hazard a guess, I doubt they'll let us go over the cliff. Doing so would impose another big hit on them politically. The country very clearly will blame them if we go over.


     Then why would they want the Bush tax cuts for the bottom 98% of Americans to become the Obama tax cuts? Seems to me that Bush has a certain legacy with the tax cuts in that even the Dems want to keep most of them.

      My guess is that the GOP has to milk this enough to satisfy the base that they tried but short of going over the cliff. So by definition this will likely be passed in the 11th hour before going over the cliff.  As Greg Sargent suggests, Boehner may let himself be "pushed" into voting just for the tax cuts for the 98%-which already passed the Senate. With all the talk about the need for filibuster reform. this was one bill that McConnell did not filibuster and it's put the House GOP in a tough spot as all that really needs to happen is to pass the Senate bill.

      Thomas Cole had recently said that if it were up to a vote it would pass. There are different ways that could come about. Nancy Pelosi talked about bringing it up herself through a House procedure that would let her do it. Or there's the "doomsday strategy" where the GOP allows a vote but simply says "present" rather than vote for or against it. So it would pass with only Democratic support.

     At the end of the day it will get all 189 Democrat votes for the bill so it would require less than 40 Republicans to break ranks. So the real question is not if it will be passed but when. My guess is late before the end of this session of Congress. Close to the last minute before the cliff.

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