The Cliff Deal: Damned if they do, less damned if they don’t
The details, from Heritage:
Some of the key points in the Senate deal, which could go to the House as early as today:
- Raises taxes on incomes over $400,000 for individuals and $450,000 for households
- Raises taxes on investment income for those taxpayers as well
- Limits tax deductions for incomes over $250,000—raising their taxes, too
- Increases the death tax rate for estates over $5 million
- Extends long-term unemployment benefits for one year
- Postpones sequestration’s automatic spending cuts (including those to defense) by two months
The five GOP NO votes: Rand Paul (Ky.), Marco Rubio (Fla.), Mike Lee (Utah), Richard Shelby (Ala.), and Chuck Grassley (Iowa).
The Republicans are in a tough place. Polls show that the American people favor raising taxes on the “rich.” Polls also show that no matter whose fault it actually is, if we go over the cliff, the GOP will get more of the blame. So, the GOP either goes against its values and the economic interests of the country (which are not served by raising taxes on the rich, nor by continuing to spend like drunken sailors) or it gets blamed for “allowing us to go over the cliff.”
There is an argument, though, that one choice is slightly better:
I agree with Mark that Republicans are terrible negotiators. I also believe that Republicans shouldn’t give in on letting taxes go up for the highest-income Americans alone (whether via deductions or higher rates) during these negotiations. There is nothing to gain from such a move: If they give in, taxes will go up on top earners, they won’t get any credit for comprising, and they will rightly be blamed by true small-government advocates for caving to political posturing from the left. Further, tax increases on high-income earners today won’t prevent taxes from going up on everyone in the future, since raising taxes on the rich is a symbolic measure that won’t raise much revenue — while having negative long-term consequences all the same. It won’t reduce the size of government today or tomorrow. In fact, it will make it easier for the government to keep on growing.
Essentially, it comes down to this: Alienate everyone, or alienate everyone except the base. By that math, they should choose the latter. Even if they give the Democrats and Obama everything the want, they will still join together with the media to savage the Republicans—if not now, then certainly at the next opportunity that our long line of similar upcoming challenges affords them. They might as well stand on principle and hold the base.
Standing on principle is what Senator Marco Rubio did:
“I just couldn’t vote for it,” Rubio told reporters. “I ran, just two years ago, on the idea that I wanted to be part of solving the long-term problems this country faces. Time and again, we’re given choices here that don’t involve that.”
“The real fiscal cliff is still there,” he said. “We’ll be back here again. In March, we’ll have a showdown like this all over again.”
A leader of the party and almost certainly a future presidential candidate, Marco Rubio is spot-on. The fiscal cliff negotiations are just a prelude to much bigger cataracts we face just a few miles down the river. The only hope for the GOP is to stand on principle at every turning and let the political chips fall where they may. Compromising, after all, helped get us in this mess. The GOP has, for too long, opted for incremental increases in the size and scope of government for the sake of comity, compromise, and getting *something* done. By and large, all they have done for years is reduce the speed, slightly, of a vessel that is careening towards an abyss. The future survival of the country depends on turning that vessel around. If they don’t, the country will suffer, and from what we know of the media and the Democrats, the GOP (as well as capitalism, individualism, and human liberty itself) will be blamed for the collapse. The GOP’s only hope now is to realize that they will be savaged either way, and do the right thing.
We will watch Speaker Boehner and the House in hopes that they will do just that.