Why are Republicans playing the Democrats' game that the "fiscal cliff" is all about taxation?
House Speaker John Boehner already made the preemptive concession of
agreeing to raise revenues. But the insistence on doing so by
eliminating deductions without raising marginal rates is now the subject
of fierce Republican infighting.
Where is the other part of
President Barack Obama's vaunted "balanced approach"? Where are the
spending cuts, both discretionary and entitlement: Medicare, Medicaid
and now Obamacare (the health care trio) and Social Security?
Social Security is the easiest to solve. So you get a sense of the
Democrats' inclination to reform entitlements when Dick Durbin, the
Senate Democrats' No. 2, says Social Security is off the table because
it "does not add a penny to our deficit."
This is absurd. In 2012, Social Security adds $165 billion to the
deficit. Democrats pretend that Social Security is covered through 2033
by its trust fund. Except that the trust fund is a fiction, a mere
"bookkeeping" device, as the Office of Management and Budget itself has
written. The trust fund's IOUs "do not consist of real economic assets
that can be drawn down in the future to fund benefits." Future benefits
"will have to be financed by raising taxes, borrowing from the public,
or reducing benefits or other expenditures."
And draining the Treasury, as 10,000 baby boomers retire every day.
Yet that's off the table. And on Wednesday, the president threw down the
gauntlet by demanding tax hikes now — with spending cuts to come next
year. Meaning, until after Republicans have fallen on their swords,
given up the tax issue and forfeited their political leverage.
Ronald Reagan once fell for a "tax now, cut later" deal that he later
deeply regretted. Dems got the tax; he never got the cuts. Obama's
audacious new gambit is not a serious proposal to solve our fiscal
problems. It's a raw partisan maneuver meant to neuter the Republicans
by getting them to cave on their signature issue as the hold-the-line
party on taxes.
The objective is to ignite exactly the kind of internecine warfare on
taxes now going on among Republicans. And to bury Grover Norquist.
I am not now, nor have ever been, a Norquistian. I don't believe the
current level of taxation is divinely ordained. Nor do I believe in
pledges of any kind. But Norquist is the only guy in town to
consistently resist the tax-and-spend Democrats' stampede for ever
higher taxes to fund ever more reckless spending.
The hunt for Norquist's scalp is a key part of the larger partisan
project to make the Republicans do a George H.W. Bush and renege on
their heretofore firm stand on taxes. Bush never recovered.
Why are the Republicans playing along? Because it is assumed that
Obama has the upper hand. Unless Republicans acquiesce and get the best
deal they can right now, tax rates will rise across the board on Jan. 1,
and the GOP will be left without any bargaining chips.
But what about Obama? If we all cliff dive, he gets to preside over
yet another recession. It will wreck his second term. Sure Republicans
will get blamed. But Obama is never running again. He cares about his
legacy. You think he wants a second term with a double-dip recession, 9
percent unemployment and a totally gridlocked Congress? Republicans have
to stop playing as if they have no cards.
Obama is claiming an electoral mandate to raise taxes on the top 2
percent. Perhaps, but remember those incessant campaign ads promising a
return to the economic nirvana of the Clinton years? Well, George W.
Bush cut rates across the board, not just for the top 2 percent. Going
back to the Clinton rates means middle-class tax hikes that yield four
times the revenue that you get from just the rich.
So give Obama the full Clinton. Let him live with that. And with what
also lies on the other side of the cliff: 28 million Americans newly
subject to the ruinous alternative minimum tax.
Republicans must stop acting like supplicants. If Obama so loves
those Clinton rates, Republicans should say: Then go over the cliff and
have them all.
And add: But if you want a Grand Bargain, then deal. If we give way
on taxes, we want, in return, serious discretionary cuts, clearly
spelled-out entitlement cuts and real tax reform.
Otherwise, strap on your parachute, Mr. President. We'll ride down together.
No comments:
Post a Comment