Democracy Soup

Making sense out of the world of politics

Obama, Dems need stronger position for true compromise on fiscal cliff

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Despite potential concerns, a flood of locusts will not come through if the United States manages to fall off the fiscal cliff. Also, first-born sons will not be in danger of death due to the fiscal cliff.

Everything short of locusts and the loss of first-born sons has been promised if the Bush tax cuts expire and spending cuts kick in at the end of the year. Panic in the streets.

Y2K promised us some panic, but comparably, that potential panic is nothing like the potential panic we are forecast to get if we fall off the fiscal cliff.

What we’re hearing from Republicans and some elements of the mainstream is that compromise is what we need to avoid going over the fiscal cliff. Their cries of compromise after almost a decade of digging the deficit deeper ring hollow as the Dems only know compromise.

Let’s acknowledge that keeping the Bush tax cuts for an extra four years is compromise enough. Republicans during the campaign whined about how President Obama was blaming Bush for what was happening for the last four years. The tax cuts were still there and that was Obama’s fault.

The Bush tax cuts were self-imposed compromise, the worst kind, so the idea of giving that up as “compromise” is a sick joke if keeping them hadn’t done enough damage to the economy in the last four years.

The latest GOP strategy is to tie reforming Obamacare to solving the fiscal cliff. Obamacare was a compromise, again somewhat self-imposed. If Dems could vote their true feelings, Obamacare would lose in a landslide.

Obamacare still allows for a healthy 17% profit margin for insurance companies for doing virtually nothing. The hassle of paperwork, which other Western countries do not have, will still exist and raise people’s blood pressure in having to deal with those issues.

The problem in the threat of going off the fiscal cliff is that the GOP wants to use that leverage to get more of what they want, i.e., not compromise.

What have progressives gained from this in the last four years? What have the conservatives really given up?

We still spend plenty on defense. Yes, Obama finally shut down the war on false pretenses (Iraq), but we’ll have 6 of President Obama’s 8 years with Afghanistan.

Bill Clinton had to spend his time cleaning up the Reagan/Bush messes on the deficit, hampering Dem attempts to spend money on programs that they want. Barack Obama has had to clean up the George W. Bush mess, forcing self-imposed and other forms of compromise.

And yet the same Republicans who literally got us into this financial mess are crying to keep us from the fiscal cliff, forcing Dems to give up even more.

Obama’s insistence of keeping the Bush tax cuts for those making less than $250,000 is still ridiculous. Low-income people, regardless of party, are being ignored. Dems would be smart to start focusing on them, since they make up the vast majority of potential voters. To be fair, the GOP would also be smart but the party has further to travel to help low-income people since the GOP is still trying to protect millionaires and billionaires.

So what should President Obama do?

If the Dems had taken back the House, the solution would be simple. Go over the cliff, wait for the new Congress to arrive in January and put together a sharp bill. Then again, the Dems should have done this in 2009.

Since the GOP will be in control of the House in December and January with a larger majority in 2013 …

Taxes

Bush tax cuts: dead for everyone. If you have to make a case for “middle class,” set the bar at $100,000 not $250,000. The GOP will whine about small businesses in a compromise. No tax cuts period is a better political sell.

The GOP has been talking about cutting loopholes. Mitt Romney offered up a deduction ceiling. Take those ideas, give Republicans credit for them, and still raise the tax rates. The Republicans get something: credit for ideas and cooperation and Dems get Clintonesque tax rates.

Keep the 2009 stimulus credits, fix the Alternative Minimum Tax (proof of progress), and slightly modify the payroll tax holiday. Show off the modification as proof of compromise. You could give away the payroll tax holiday as proof the economy is getting better, but be willing to keep it for compromise sake.

Ideally, Obama should use Romney as an example and make sure people in his position pay their fair share. The rich won’t like that, but the people will.

Spending

The taxes won’t put the country over the fiscal cliff, though this is what you hear in the press. The real issue to the economy is the spending.

As much as progressives will cheer about defense cuts, the cuts in programs are devastating. And there is little to no shot at getting only defense cuts.

One ideal compromise is that defense plants would make high-speed rail cars and solar panels and devices to capture wind power to build up the infrastructure instead of planes and bombs. That would be the ultimate compromise, since the GOP loves defense spending. Defend us against crumbling infrastructure.

By cutting loopholes and raising the tax rates, the Dems could hit the $1.2 trillion in deficit reduction mark, which would void the sequester cuts. If anything, the $1.2 trillion number should be the fiscal cliff. Obama wants $1.6 trillion over the next decade, a strong position for compromise.

Going over the fiscal cliff on spending would force both hands to work harder on a deal. The Dems have to fight hard for unemployment insurance. Everything else could be negotiated in January. Things would be bad enough on both sides that the $1.2 trillion mark would sound like a better solution.

Of course, the deficit cutting doesn’t help the need to stimulate the economy. Better economic numbers would raise tax revenue and be the best cure for the deficit. Getting out of Afghanistan early, cutting off farm subsidies to rich people, setting the middle class at $100,000 not $250,000 are better ways to reduce the deficit, but those ideas aren’t even at the kids table, much less the adult table. Both parties should get on board with these easy ideas where the American people would support, regardless of party, and neither party wants to make those moves.

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One Response

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  1. Economists have warned that going over the fiscal cliff — the set of sizable tax increases and spending cuts mandated to take place early next year — would throw the nation back into a recession .

    gold acc

    December 15, 2012 at 11:15 am


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