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Opinion

Opinion

Opinion: GOP leaders giving too much on fiscal policy

December 8, 2012

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— Let’s understand President Obama’s strategy in the “fiscal cliff” negotiations. It has nothing to do with economics or real fiscal reform. This is entirely about politics. It’s Phase 2 of the 2012 campaign. The election returned him to office. The fiscal cliff negotiations are designed to break the Republican opposition and grant him political supremacy, something he thinks he earned with his landslide 2.8-point victory margin on Election Day.

This is why he sent Treasury Secretary Tim Geithner to the Republicans to convey not a negotiating offer but a demand for unconditional surrender. House Speaker John Boehner had made a peace offering of $800 billion in new revenues. Geithner pocketed Boehner’s $800 billion, doubled it to $1.6 trillion, offered risible cuts that in 2013 would actually be exceeded by new stimulus spending, and then demanded that Congress turn over to the president all power over the debt ceiling.

Boehner was stunned. Mitch McConnell laughed out loud. In nobler days, they’d have offered Geithner a pistol and an early-morning appointment at Weehawken. Alas, Boehner gave again, coming back a week later with spending-cut suggestions — as demanded by Geithner — only to have them dismissed with a wave of the hand.

What’s going on here? Having taken Boehner’s sword, and then his shirt, Obama sent Geithner to demand Boehner’s trousers. Perhaps this is what Obama means by a balanced approach.

He pretends that Boehner’s offer to raise revenues by eliminating deductions rather than by raising rates is fiscally impossible. But on July 22, 2011, Obama had said that “$1.2 trillion in additional revenues ... could be accomplished without hiking tax rates, but could simply be accomplished by eliminating loopholes, eliminating some deductions and engaging in a tax reform process.” Which is exactly what the Republicans are offering today.

As for the alleged curative effect on debt of Obama’s tax-rate demand — the full rate hike on the “rich” would have reduced the 2012 deficit from $1.10 trillion to $1.02 trillion.

That’s a joke, a rounding error.

Such nonsense abounds because Obama’s objective in these negotiations is not economic but political: not to solve the debt crisis but to fracture the Republican majority in the House. Get Boehner to cave, pass the tax hike with Democratic votes provided by Minority Leader Nancy Pelosi, and let the Republican civil war begin.

It doesn’t even matter whether Boehner gets deposed as speaker. Either way, the Republican House would be neutered, giving Obama a free hand to dominate Washington and fashion the entitlement state of his liking.

This is partisan zero-sum politics. Nothing more. Obama has never shown interest in genuine debt reduction. He does nothing for two years, then spends the next two ignoring his own debt-reduction commission. In less than four years, he has increased U.S. public debt by a staggering 83 percent. As a percentage of GDP, the real marker of national solvency, it has spiked from 45 percent to 70 percent.

Obama has never once publicly suggested a structural cut in entitlements. On the contrary, he created an entirely new entitlement — Obamacare — that, according to the CBO, will increase spending by $1.7 trillion.

What’s he thinking? Doesn’t Obama see looming ahead the real economic cliff — a European-like collapse under the burden of unsustainable debt? Perhaps, but he wants to complete his avowedly transformational social-democratic agenda first, and let his successors — likely Republican — act as tax collectors on the middle class (where the real money is) and takers of subsidies from the mouths of babes.

Or possibly Obama will get fiscal religion and undertake tax and entitlement reform in his second term — but only after having destroyed the Republican opposition so that he can carry out the reformation on his own ideological terms.

What should Republicans do? Stop giving stuff away. If Obama remains intransigent, let him be the one to take us over the cliff. And then let the new House, which is sworn in weeks before the president, immediately introduce and pass a full across-the-board restoration of the Bush tax cuts.

Obama will counter with the usual all-but-the-rich tax cut — as the markets gyrate and the economy begins to wobble under his feet.

Result? We’re back to square one, but with a more level playing field. The risk to Obama will be rising and the debt ceiling will be looming. Most important of all, however, Republicans will still be in possession of their unity, their self-respect — and their trousers.

— Charles Krauthammer is a columnist for Washington Post Writers Group.

Comments

just_another_bozo_on_this_bus 2 years ago

An Invented Crisis Threatens the Forgotten Millions

by Paul Krugman

"Let’s get one thing straight: America is not facing a fiscal crisis. It is, however, still very much experiencing a job crisis.

It’s easy to get confused about the fiscal thing, since everyone’s talking about the “fiscal cliff.” Indeed, one recent poll suggests that a large plurality of the public believes that the budget deficit will go up if we go off that cliff.

In fact, of course, it’s just the opposite: The danger is that the deficit will come down too much, too fast. And the reasons that might happen are purely political; we may be about to slash spending and raise taxes not because markets demand it, but because Republicans have been using blackmail as a bargaining strategy, and the president seems ready to call their bluff."

For the rest of the column--

http://www.commondreams.org/view/2012/12/07-9 or

http://www.nytimes.com/2012/12/07/opinion/krugman-the-forgotten-millions.html

Richard Heckler 2 years ago

Repubs have failed the majority of the USA population that being the 99%. The 99% was the motor behind everything that had anything to do with the economy. Why do repubs allow that to be nearly destroyed?

Why did congress provide a tax code that protects profits on USA goods made abroad in essence encouraging outsourcing of USA jobs by the millions. Repubs need to explain their logic that USA blue and white collars do not need jobs. and the USA economy

Republicans needs to explain their logic that the USA economy does not need millions upon millions of blue and white collars working in the USA. Where did these conclusions come from? Corporate America was never going broke instead making tons of profits.

How did blue and white collar workers lose these millions upon millions of jobs?

It’s not the Unions!

--- 1. Mergers = industry and jobs lost to other countries

--- 2. Hostile Takeovers = industry and jobs lost to other countries

--- 3. Leveraged Buyouts = industry and jobs lost to other countries

--- 4. Free Trade Agreements = industry and jobs lost to other countries

--- 5. Reagan/Bush Savings and Loan home loan scandal which killed the economy and cost the USA millions of jobs. = industry and jobs lost to other countries

--- 6. Bush/Cheney Home Loan scandal killed the economy and cost the USA millions of jobs = industry and jobs lost to other countries

All of above ultimately translate into millions upon millions upon millions of blue and white collar USA job losses in some cases to dictatorships. Big time layoffs are the end result. These jobs go abroad with tax codes that prevent taxation on profits made abroad from USA big name corporations.

There was a time when becoming employed by corporate America came with long term employment, fine wages and dependable retirement benefits. Those days are gone. Why did congress participate in killing the USA economy and millions upon millions of blue and white collar jobs?

Betty Bartholomew 2 years ago

"But on July 22, 2011, Obama had said that “$1.2 trillion in additional revenues ... could be accomplished without hiking tax rates, but could simply be accomplished by eliminating loopholes, eliminating some deductions and engaging in a tax reform process.” Which is exactly what the Republicans are offering today."

But which deductions was Obama talking about vs. what the Republicans are now offering?

There are deductions the rich use, and there are deductions the poor use. The President (ostensibly) leans toward cuts to the former, and the Republicans (ostensibly) lean toward cutting the latter. I have a feeling this difference is the sticking point, but the piece doesn't elaborate.

bd 2 years ago

Time to vote them all out!

Tea anyone???

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