Simons’ Saturday Column: Stakes are high in the current federal tax debate

“Lame duck” legislative sessions, facing tight time deadlines, whether at the state or national level, do not provide the best political environment in which to conduct serious discussions or shape long-lasting laws and policies.

Those serving in the U.S. House of Representatives and Senate have known for years that if the 2001 and 2003 federal tax provisions are not extended and a variety of other tax provisions are allowed to lapse, the nation and most of its citizens face the likelihood of plunging over a “fiscal cliff.”

According to the Tax Policy Center, a joint venture of the Brookings Institution and Urban Institute, 90 percent of American households will face higher taxes in 2013 if Congress and President Obama are not able to agree on a deficit reduction plan.

Tax increases are scheduled to come about because the various tax cuts were approved on a temporary basis due to end on Jan. 2, 2013, roughly four weeks from now.

The American public, as well as the welfare of the nation itself, now are in the middle of a massive political game with President Obama, a number of Democratic senators playing hardball and the Republican-controlled House.

The debt crisis and how to keep the economy afloat are the critical issues. Obama and his fellow Democrats say the first step in trying to solve the problem is to raise taxes.

Republicans say they, too, want to help bring about a solution, but that if taxes are to be raised, there must be an even greater level of cuts in federal spending to make a meaningful dent in the growing national debt.

Democrats say tax hikes must be approved this year and that any cuts in federal entitlement programs will be put off until sometime next year. Republicans say “no way” and that federal spending cuts must be detailed before they OK tax hikes.

Neither side wants to budge, although all lawmakers realize they must take reasoned, positive action to avert a very serious situation. The big question is whether this “serious situation” is sufficiently serious to force the various players to cut a deal that meets opposing viewpoints somewhere in the middle.

Unfortunately, this all is taking place after a heated presidential campaign, and the fallout from the election certainly is playing a big role.

Obama and his followers in the Senate won the White House for another four years and retained their majority in the Senate. To the winner belong the spoils, and they see no reason they should have to compromise on how they intend to avoid falling off the fiscal cliff. They want tax hikes now and say they will consider spending cuts next year.

Republicans still control the House and, due to Obama failing to measure up on many promises and pledges he made in his 2008 election bid, along with the adamant stance of 30 or more Democratic senators saying they will not agree to any cuts in major federal entitlement spending programs, it is difficult for GOP House members to agree to tax increases at this time and accept a good-faith proposal by Democrats to consider spending cuts next year.

Some might fear the Democrats offer a bait-and-switch proposal. Others might suggest Obama believes this is the time to force the issue and, in the process, crumble any GOP unity in the House.

Also, the manner in which Democrats are staging this battle could be a tip-off to how they intend to conduct affairs for the next four years in partisan legislative battles and the use of executive power.

If Obama is able to split the GOP in this debate, there is every reason to believe he will intensify efforts in future contentious legislative negotiations. He has said he intends to change America and obviously plans to follow through on this pledge. He is on the attack on the tax hike issue, scheduling campaign-style stops around the country to rally support for the Democratic plan and urging citizens to flood the offices of GOP lawmakers with calls for them to approve his tax plan.

Now is not the time to play chicken or see which side is the first to blink.

Granted, Obama won the presidency and, again, to the victor belong the spoils, but there are times when it seems much more can be accomplished when a winner tries to come close to meeting the wishes of those who didn’t win.

Such an approach often pays off in the long run and for the benefit of all parties.

It will be interesting to see whether Democrats continue to try to win a knuckles-down arm wrestling contest or offer a genuine compromise that is best for the country.

Unfortunately, it appears the game rules have been set by Obama, Sen. Harry Reid, Rep. Nancy Pelosi and the 30 hard-core Democrats who say they will not budge on any entitlement cuts.

Once more, to the victor belong the spoils, but consider what the “spoils” may be in this case.