Everyone was chummy and hopeful about a deal at the White House today, but if you’re surprised to hear that some Democrats are intent on driving a very hard bargain, you must have missed the polling data last night. They promised their base a tax hike on the rich and they can make it happen by doing nothing, with voters primed to blame the GOP for the economic fallout. Under those circumstances, why not go cliff-diving?
[The Gang of Six] reconvened on Tuesday, but the election results presented a new set of problems. Republican officials familiar with the talks say Democrats dug in on demands for tax revenue that Republicans are not willing to meet. Democratic aides say Republicans who had spoken abstractly about the need for more revenues are balking at the specifics.
“Things change. It’s not just a matter of the numbers changing, and they do,” Mr. Durbin said of shifting deficit projections, revenue forecasts and spending totals. “It’s also a matter of the political environment, and the landscape changing.”
Democrats freely admit they have shifted their stance from the defensive crouch of the summer of 2011, when they signed on to a budget deal that cut $1 trillion in spending with no tax increases, to now, when they believe the voters have given them a mandate to raise taxes on the affluent…
Both sides insist they want a deal before January, but a rising chorus of voices, especially Democrats, say they would rather go over the cliff than accept a deal that raised too few taxes while extracting too many cuts, especially to Medicare and Medicaid.
That’s the state of entitlement reform in America 2012, two years after a Republican landslide and a VP nomination for Paul Ryan. Here’s the question: How many Republicans would also prefer to go over the fiscal cliff (briefly), not because it’ll help them get what they want but because it’ll arguably make things politically easier for them to let Democrats get what they want? What I mean is, if Republicans make a deal now to raise taxes on the rich in exchange for deep spending cuts — even if they insist on limiting the rate hikes to millionaires only — they’ll be hammered by the conservative base for selling out. But if they go over the cliff and let the Bush tax cuts lapse, then agree with Obama to extend the old, lower rates for the middle class only, they can claim that (a) they didn’t blink under the pressure of the deadline bearing down on them and (b) technically speaking, they’re not responsible for the new, higher tax rates on the rich. In this post-cliff scenario, the new tax hike on the wealthy happens automatically, without any Republicans voting for it; the only vote Republicans would take would be to lower taxes, albeit only on the middle class. In practice, you’re getting the same outcome as you would if they made a deal now to reinstate the Clinton-era rates for high earners (plus, er, the initial fiscal shockwave from going over the cliff and the chaos afterward in trying to apply the lower middle-class rates retroactively), but in theory it’d be easier to sell politically because the House GOP would have avoided casting any votes affirmatively for new taxes.
Is that sort of posturing valuable enough to them to warrant going over the cliff, or is it just too risky given the likelihood of a new cliff-driven recession and the blame Republicans might get when it happens?
Oh, in case you’re wondering, here’s Boehner’s plan to make sure the government remains disciplined in tightening its belt if a deal is reached:
According to a Boehner aide, the speaker suggested that the leaders agree on long-term revenue targets for tax reform and spending targets for entitlement reform, as well as enforcement mechanisms that would kick in if Congress fails to act on either next year.
Sounds like part of the solution to the bind that the sequester’s left them in is … another sequester.