The Harsh Republican Reality of the Fiscal Cliff

I break from a majority of Republicans on the current fiscal cliff negotiations and believe the rate increases that Democrats are seeking should eventually be agreed to. More specifically I would support John Boehner signing on to taking the top bracket from 35% to 37-38% (short of the 39.6% Obama wants).

Of course the argument against doing so is the superior one—essentially that the Senate and the President want more money to spend while having not passed a budget in 3 years and having not yet put any real spending cuts or entitlement reforms on the table. But the two Parties have been at a stalemate over this issue for years and in my view the trump card is that last month they held the Senate, picked up seats in the House, and won the Presidency. To me the bottom line is that if a political party never agreed to anything they didn’t think was 100% ideologically or philosophically accurate we would never reach any compromise. This in fact is the definition of compromise, and in light of the election results anyone who thinks Republicans weren’t pushed into a position of forced compromise is fooling themselves.

The reasons for swallowing this bitter pill are multiple. First off, though often times the winner of an election pushes for the passing of legislation saying they ran on it when they really didn’t—that is not the case here. There is no question that President Obama ran on raising taxes on rich people and Mitt Romney ran on lowering rates and capping deductions. Secondly, over 60% of the American people in poll after poll say they want the wealthier among us to pay more taxes. Unfortunately, the alternative of refusing to budge on this issue in favor of tax increases on 98% of Americans is simply not good policy.  All sides agree it would be devastating, not to mention it plays into all the awful stereotypes of Republicans and is politically fatal.

Not helpful here is that this whole discussion echoes the earlier scene at a Republican Primary debate where all 10 candidates on stage said they would not take a deal of $10 in spending cuts for $1 of revenue increases—the majority of non-hardliners in this country just flat out won’t deem a political party serious about solving a problem with this kind of position.

If you are seeing this, your Custom URL is not pointing to the correct image!Just to be clear, the above is not at all to say I agree with raising any rates, but the facts are the facts. The Democrats have a far stronger hand here—and it’s certainly strong enough to yield this specific tax increase they desperately want.

Looking on the bright side, after suffering the defeat we just had nationally if the only direct price Republicans have to pay is to raise taxes by 2-3% on one bracket in order to get the Bush tax cuts made permanent (until we have a majority to do real reform), then I think one could argue that is not an obscenely high cost.  The big part of making this an acceptable outcome is of course what will be given by the other side to reward this concession?

As of now clearly Democrats have not offered anything and are not acting in good faith. Since they don’t have to give on entitlement reform in this situation, essentially Democrats are going to have to agree to hundreds of billions in non-discretionary, non-defense spending cuts. My position is if Boehner gets this in exchange for the small bump in rates, that is an acceptable outcome. If he isn’t able to achieve that—then caving on this position is a major defeat.

The Media Fails Us Again

So far in this “negotiation” Republicans and John Boehner in particular have been getting killed for letting the whole debate revolve around a portion of revenue increase that would fund the government for about 8 days. This is such a great and obvious point, and frankly the shallowness of our national debates in general makes it hard to have much hope for the future of the Republic.

I fully agree with the criticism for Republican leadership losing the messaging war on one hand, but on the other I wonder what more they can do about it. Time and time again they speak of Washington not having a revenue problem but a spending problem, and they certainly are publicly making the case this would fund the government for only 8 days. The reality is that of all the power and influence the liberal media has over this country, perhaps the most lethal and subtle is their ability to decide what the focus of the debate is. For obvious reasons the President wants it to center on a rich vs. poor construct, and low and behold that is exactly what we have.

My Advice To Boehner

If I were advising Republicans I would suggest putting this debate in context by making an obvious point that I have not heard made yet. The absolute proof that we have a spending problem and not a revenue problem is that just to balance the budget in one fiscal year we would have to raise tax revenues by 40%. Yes that’s right, 40% more dollars into the treasury just to get to the point that we are not running a deficit every year—that is without paying down a penny of the $16 trillion in National Debt.

This of course is because in past years we have borrowed 40 cents of every dollar we spent (so far this year it is up to 46 cents of every dollar). The notion that tax rates would have to be raised on the entire country to a level generating 40% more money each fiscal year is so insane that just maybe it could break through the media machine and into view of the population.

The End Game

What’s so frustrating for Republicans, including myself, is how much sense these arguments make and that we can’t even get the Party that controls the majority of our government to even discuss the bigger more frightening picture.

That being said, the reason we have elections is so that each Party can make their case and the people can make their choice. Even though it’s not sound policy, given the fact that this choice has just been made, conceding a few percentage point increase for one tax bracket is not the end of the world.

In spite of all the venom being directed toward the Republican leadership in the House we need to be rooting for them to succeed—which in this case means getting the least destructive outcome in a tough situation.

 

About the Author

Mr. Arnold is a long time constitutional conservative. He holds a Bachelor of Arts Degree in English Literature from the University of Iowa. Over the last few years he has been involved in numerous political campaigns, most recently serving as campaign manager for an Iowa House candidate and serving as a city chair for Tom Latham. He is self-employed, running a small business in Ankeny, Iowa where he resides with his wife.

 

RSS Feed for This Post1 Comment(s)

  1. John Bloom | Dec 10, 2012 at 9:47 am | Reply

    Justin, I think you make a fair point. I personally am uncertain if the passage of tax or revenue increases will or will not affect the sequestration trigger under the Budget Control Act or Paygo. I’m also of a mindset that the Bush tax schedule was deeply flawed in allowing so many people to be exempted from Federal Income tax and for allowing refundable tax credits that have essentially become a back door expansion of welfare.

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