No ‘Fiscal Cliff’ Middle Ground

The latest machinations surrounding the so-called fiscal cliff, a combination of tax increases and spending cuts many economists insist would put the nation back into recession, continue. Ironically, the current impasse has far less to do with economic realities than ideological intransigence. The lion’s share of that intransigence belongs to the president, who has made it increasingly clear that any deal, even one that includes increased revenue, is DOA unless it includes higher taxes on the “rich.” Treasury Secretary Tim Geithner illuminated the administration’s position on Sunday. “There’s no path to an agreement that does not involve Republicans acknowledging that rates have to go up on the wealthiest Americans,” he said on NBC’s “Meet the Press.”

Yet on Monday, Republicans made an offer described as a “savvy tactical move,” or an effort to regain the high ground in the debate. House Speaker John Boehner (R-OH) sent a letter to the president that embraced many of the ideas put forward by Democrat Eskine Bowles, who was part of the Simpson-Bowles Commission put together in 2010 by Obama himself. It was an ostensible effort to rein in the nation’s burgeoning debt, currently standing at more than $16.2 trillion. The commission came up with a series of recommendations, including a cap on discretionary spending, some tax increases, and overall tax reform. It was subsequently rejected by the president, likely due to the reality that it recommended cutting individual tax rates to as low as 23 percent, and capping federal spending and revenue at 21 percent of GDP. It is the latter proposal that likely irked a president determined to maintain government spending and revenue at the current 24 percent of GDP, matched only by FDR during WWll.

The proposal offered by Boehner endorsed a 10-year plan, including $800 billion in new tax revenues, $600 billion in health savings, another $600 billion in a combination of “mandatory” and “discretionary” savings, and a revision of the Consumer Price Index (CPI) used to calculate future Social Security benefits that would save another $200 billion. Such savings total $2.2 trillion. It was a genuine compromise, as evidenced by the reality that it irritated many Republicans.

In his letter, Boehner explained the rationale for such a plan. After noting that the election essentially maintained the status quo of a Republican House, along with a Democratic Senate and presidency, Boehner contended that “the American people rightly expect both parties to come together on a fair middle ground and address the nation’s most pressing challenges.” He further emphasized that the plan Obama submitted to Congress last week was a re-hash of the president’s “Plan for Economic Growth and Deficit Reduction,” submitted in September 2011. “We cannot in good conscience agree to this approach, which is neither balanced nor realistic. If we were to take your Administration’s proposal at face value, then we would counter with the House-passed Budget Resolution [Paul Ryan’s budget plan].”

Boehner then put the proverbial ball in the administration’s court. “This is by no means an adequate long-term solution, as resolving our fiscal crisis will require fundamental entitlement reform. Indeed the Bowles plan is the kind of imperfect but fair middle ground that allows us to avert the fiscal cliff without hurting our economy and destroying jobs. We believe it warrants immediate consideration.”

The administration did consider it — sort of. Senior administration officials contended the plan wasn’t serious enough to merit a counter-proposal. White House Communications Director Dan Pfeiffer claimed it “does not meet the test of balance. In fact, it actually promises to lower rates for the wealthy and sticks the middle class with the bill.” He then reiterated the administration’s immutable demand. “Until the Republicans in Congress are willing to get serious about asking the wealthiest to pay slightly higher tax rates, we won’t be able to achieve a significant, balanced approach to reduce our deficit,” he added. CNN then laid out the administration’s real aims: “Senior administration officials said they are confident the public will blame Republicans and not the president if the United States reaches the end of the year without a deal to avert the fiscal cliff.”

With ample assistance from the mainstream media, that is virtually certain. But such thinking reveals an almost unprecedented level of cynicism. In effect, administration officials have admitted that what benefits Democrats politically trumps what benefits the nation. So much so, they are willing to let the country slide back into recession, as long as Republicans get blamed for it.

In an interview with MSNBC’s Andrea Mitchell, Rep. Tom Price (R-GA) revealed the disingenuousness of the administration’s insistence that taxing the rich is a panacea. “The president’s plan to increase taxes on the upper two percent covers the spending by this federal government not for eight years, not for eight months, not for eight weeks but for eight days. Eight days only,” said Price. “It’s not a real solution. So, again, I’m puzzled by an administration that seems to be more interested in raising tax rates than in gaining economic vitality.”

Furthermore, a usually reliable media is not marching in lockstep with Democrats. Politico’s Ben White called the GOP’s proposal “significant,” noting that it is “less fanciful than the original administration request, which included phony savings (the war wind-downs), a gratuitous fork-in-the-eye (unlimited debt ceiling authority) and some new stimulus (just to make GOP blood boil and warm liberal hearts).” Bloomberg’s Josh Barro also saw the cynicism expressed by the aforementioned senior officials, contending that “if the White House really is willing to risk an austerity crisis unless it gets its way on an unrelated policy matter — then the Obama Administration is as irresponsible as it often accuses Republicans of being.”

The Washington Post’s Robert Samuels laid it out even better. “Put Social Security on the table — clearly and irrevocably,” he writes. “Protecting retiree benefits is the left’s political equivalent of the right’s ‘no new taxes’ pledge. Congressional Republicans are abandoning their untenable position. Now it is time for President Obama and congressional Democrats to do the same. As long as they don’t, they aren’t bargaining in good faith, or in the national interest.”

Even Erskin Bowles, who insisted that the GOP plan was not representative of his efforts, or those of the Simpson-Bowles plan, called for compromise. “Every offer put forward brings us closer to a deal, but to reach an agreement, it will be necessary for both sides to move beyond their opening positions and reach agreement on a comprehensive plan which avoids the fiscal cliff and puts the debt on a clear downward path relative to the economy,” he said in a statement.

The Congressional Budget Office (CBO) offers a sobering look as to why such an agreement is necessary. In 2012, non-interest federal spending totaled $3.25 trillion. $762 billion was for Social Security, $469 billion for Medicare, $251 billion for Medicaid, and $651 billion for defense. These expenditures account for 66 percent of the federal budget. Since the federal government borrows forty cents of every dollar it spends, America is already in the red financing just these four programs – and that’s before the bulk of the Baby Boomer generation retires, driving at least three of these costs far higher.

Interest payments on America’s outstanding debt are also part of the mix. In 2012 that payment was $359 billion, financed at record low interest rates of approximately 2.8 percent. The Federal Reserve claims it will keep interest rates at near-zero until 2014. Based on current rates of spending, the national debt will likely approach $20 trillion by then. If interest rates return to a historical average of 4 percent, a staggering $800 billion will be needed just to pay the interest on that debt. There is also the “unfunded obligations” problem. Unfunded obligations are promises the government has made to such entities as seniors, veterans and retired employees. By 2011, America’s unfunded obligations totaled $61.6 trillion.

In short, the idea that “taxing the rich” is a make or break part of any deal — even as entitlement reform remains off the table — borders on insanity.

Yet two realities are readily apparent. First, that insanity is ideologically driven. This was made clear during the 2008 Democratic primary debates, when ABC’s Charlie Gibson asked the president why he supported an increase in the capital gains tax rate, given a historical record that repeatedly shows the government losing revenue as a result. “Well, Charlie, what I’ve said is that I would look at raising the capital gains tax for purposes of fairness,” he answered. This goes a long way towards explaining why the president would rather kill a deal than accept tax reform as a viable alternative for raising revenue.

If such “fairness” precipitates a recession–or worse–in 2013, due to an inability to reach a compromise? As long as Republicans get blamed, all is well. That Democrats as a party, or the president as an individual, see themselves as the ultimate arbiters of fairness–for the entire nation–demonstrates a breathtaking level of arrogance.

Second, whether they realize it or not, it is this combination of arrogance and fiscal irresponsibility that Americans re-empowered on November 6. Despite an election that reinforced the status quo, Obama and Democrats believe they were given a mandate, and that Republicans are nothing more than an inconvenient impediment in their efforts to transform the nation into a Euro-style welfare state, even if another recession is necessary to do so.

Finally, Americans need to realize that President Obama’s campaign pledge to raise taxes on “millionaires and billionaires” is really targeting individuals making $200K, and families making $250K — right now. Since that additional revenue would only run the government for eight days, the public might want to consider what other sources of revenue the president and his party will subsequently target. That is worth remembering when the definition of millionaires and billionaires is “revised” once again. Perhaps in the not-too-distant future, anyone earning $150K — or less — will be surprised find themselves on the “wrong” side of the Democrats’ never-ending class warfare campaign. They shouldn’t be. To paraphrase Willie Sutton, the middle class will be the next target because, “that’s where the money is.”

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  • pierce

    I, personally, challenge you REPUBS, to do the wrong thing for our country, go along with my raising TAXES, and I will spend that money fourfold. The pain you are creating for those people who don't pay TAXES is immeasurable. Let them reap all the benefits of my taking from the rich, and allowing the poor to live the life of Riley. So sayeth our esteemed President. Amen to that, Amen.
    I do not need self control now that I have you in the hold.

    • mlcblog

      Nice sarcasm, if I am reading you right.

      • pierce

        You are.

        • mlcblog

          Whew! It can get tricky without tone of voice or body language. Text alone. Some get lost. I have had people misunderstand my sarcasm and attack me!! oh, well.

    • JacksonPearson

      You're so full of Progressive green crap, that it's oozing out of your nose, mouth, and ears.

  • patron

    Even with $2.2 trillion over 10 years, the fed will still be adding $1 trillion a year in new debt. They are screwed.

  • clarespark

    Populism is unattractive and wrong wherever it appears. See…. "Perceptions of the enemy: the Left looks at the Right and vice-versa." POTUS wants to destroy the Republican Party and it would be a shame if conservatives swallowed the bait by hating "the establishment". (And I refer to the Republican establishment.")

  • tagalog

    Boehner made a compelling argument that voters voted for maintaining the status quo, with the idea being that solutions to our financial problems could be reached on a bipartisan basis. There's sense to that interpretation.

    Too bad Barack Obama and the Democrat Party believes that the election was a wholesale vindication of the worst of the Obama administration's politics since early 2009.

    The differing views are what's going to drive the refusal of both sides to compromise and send us over the "fiscal cliff." I envision at least another 3 years of recession. Oh wait, I forgot, the recession's over…

    How in the heck is the report of unemployment dropping to 7.7% being accepted as credible? What's the explanation for that number? Things don't SEEM any better…


      Things don't seem any better because they're not any better. Either more people have dropped out of the workforce (as defined by BLS), or else they're playing games by "seasonally adjusting" the numbers. I haven't looked at the raw data yet, but I don't believe for one instant that we actually gained ground in November: the Dow lost 500 points on Nov. 7-8 because of Barry's re-election, and there's no way that kind of disastrous news would somehow inspire businesses to start hiring again.

    • mlcblog

      He's basically drunk all the time. Not sloppy but just a little tanked as a normal daily state of affairs, thus changes mind, forgets important points, wanders. That is my explanation for the lack of persona in this otherwise attractive and possibly talented man. He was fascinated with the tea party at first.

  • Arley Steinhour

    Has anyone noticed, besides 'Patron,' above, that it only takes a sweeping pen, to spend Billions, if not Trillions, of dollars, """Immediately""", yet it always takes ten years to save an equal amount to but one of those pen-scribbles to spend????????? BHO can't do a thing, if we tell him to 'go fish,' as we all, including him, will go over the cliff. He hasn't proven a thing, so far, other than, when he speaks, one group, Liberal, bows to the Savior, and the other group, Conservative, seem to fear bankruptcy, more than they do Satan, so they knuckle under, and cower in a corner … Oh, sure, some talk loud, but no one, Liberal, nor Conservative, has had the wherewithal, to STATE: Geronimo (old paratrooper call), and step forward … of course that brave person needs have all the population tied on the same rope, so as not to be the only person who takes the 'Plunge', so to speak. Tell BHO NNNOOO!!!!!, take away his allowance-pen, and tell him to go work for a living, instead of trying to destroy this country.
    I would volunteer, but I probably won't be here, …. , but you don't want to hear about that, just yet ("Rapture" is such a laughable word). End of Blather. Merry Christmas, and, Happy Chanukah, and Mayan Calendar End/Restart-day …. did I miss anyone??

  • κατεργάζομαι

    Stevie Wonder is BLIND: What is the Obama/Reid/Pelosi/DNC excuss?

    • Mary Sue

      They're doing it on purpose. Someone went and washed their brains good in their youth.

  • Ghostwriter

    What the Obama administration and the Democrats don't get is that there aren't enough rich people in America to pay for their social programs. All these tax hikes are going to do is fall on the middle class they claim to champion so much.

    • JacksonPearson

      Exactly. Once government starts taxing, their black hole gets wider and deeper.

  • UnitConverter

    I am sick of these POS politicians who play games with our lives while they live high on the hog and suffer no repercussions from their decisions. I hope they all burn in hell.

    • mlcblog

      Just too reminiscent of communist countries and dictatorships we have seen. Tyranny.

  • Guest

    A constitutional amendment to curb government borrowing is needed badly. They got the Federal Reserve, and in the last 100 years, the value of the dollar had dropped over 95%.

    Kill the borrowing on the good name of the American People with the only exception being a declaired act of war by Congress.

  • BS77

    It isn't a fiscal cliff…it's a liberal socialist cliff. Tax tax tax. Spend Spend Spend Borrow money from yourself to pay off the debt? This is fiscal irresponsibility at base. 17 Trillion in deficit spending. Trillions in foreign trade debt. We are in deep KIM CHEE.

  • BS77

    You should go back to elementary school and learn grammar and spelling.

  • Matt

    It is simple you want to live you come with me, you want to die and walk to your death, your choice. It is pretty late in the evening. Iranian nuclear bomb, 300,000 plus missiles and rockets pointing at you, which will be used. An you will need nuclear weapons against 300,000 rockets. It is up to you.

  • Matt

    Freedom of choice I use to fish for trout and drink with the SS, and you are doing it again walking to your deaths. But if it is what you want, your choice. If that is what you want. Those old Nazi said their is something about the Jew simply walk to their deaths, enabled by other Jews. I can't decided for you, I will stand with you.

  • Matt

    That is the problem you decided not to go with me an live and throw it in with the Yanks and die.

  • Matt

    My doctor loves Israel, he says you are scaring me, he says you loved Israel, now you don't care, (and it is not the little Malaysian Jew hater and tabs), if people wish to walk to their death of their own free will so be it. What can I do.

  • Matt

    It is finished, it is over for you. Big deal Muslim a bunch of Jews moved from a bunch of sand. But what is your world going to look like. Your problems are just beginning.

  • Matt

    The Mahdi is coming, the 12th Imam, I am the Mahdi, as far as you are concerned I am Jesus Christ, abla hombre.

  • play2k

    I'm with Rand. Vote "Present" and make it very very very clear that you are unable to stop obama. Do this for the entire time left. Every day, every interview say nothing more. Get lots and lits of footage of obama's class warfare and your own boycott of this destructive policy you cannot stop. You can bet your bottom collar they will blame Republicans for this and everything else they have planned to further destroy the economy. Get money offshore untraceable. Gold/silver and bury it if you have to and batten the hatches. They are coming for your paper.
    I think we need a standard form for all the layoffs explaining that onshore production is no longer feasible.
    I guarantee you people want their paycheck Friday- Just explain to them that OBAMA SPENT IT ALREADY! The choice is theirs to stay on or not, but obama/pelosi and reid have already claimed the payroll//

  • umustbkidding

    You want to talk about enablers – the Republican party are the Democrat enablers. I say let the part go over the cliff with the budget and drag the dems down with it.

    We need at least one completely new party to represent us. The tea party has a good start but we need more than one party. We need a flood of ideas being put in front of the people. If things stay as they are there will be no point in voting.

  • Flowerknife_us

    The 47% grew with the Million or so votes a free Phone will buy. Plus the how many million extras who received Food Debit cards ?

  • john in cheshire

    My opinion is that when we look upon Mr Obama, we see an agent of evil. He's not the only one, for the devil will employ as many to his cause as he can. Mr Obama might look youthful, slim, attractive, and (God forgiveme, charismatic) but he is just one of many in positions of power who have succumbed to all that is evil in the world. It is possible that he doesn't even know he is carrying out satan's plans, but I'm afraid that I don't hold to that view. Here in the UK, we have Mr Blair, Mr Mandelson, Mr Cameron and many hundreds more. We, in the West particularly, are in an epoch where badness has suppressed goodness. Who knows how long this will last, but the least we can do is inform the most people we can that this is happening.

  • Len_Powder

    Fortunate indeed are those people who did not have to live through the irrationality and insanity of the Obama regime! This comment applies to those who died before the 2008 elections, not those who were born after them. So little in today's world makes any sense. Is it any wonder that people are addicted to shows like American Idol and so many others utterly devoid of meaning, significance, or value? Those who still have faith in the ability of men to create perfect societies are at the same time among the richest and the most deluded of mankind. If there is no merciful God to save man from himself then the end of human civilization is only a matter of time. Thus spoke Zarathustra!