With 24 days remaining to strike a deal, the two sides remain far apart. House Speaker John Boehner claimed Friday that President Obama’s offers are just “more of the same.” Democrats say Republicans have to give more on taxes before they can reach a serious agreement.
Given this divide, it may seem counterintuitive that lawmakers left themselves just two months to negotiate their way out of the crisis – the two months after Election Day and before the Jan 1 deadline.
But the reality is that lawmakers have been trying to strike this kind of a deal for years, and each time ended up pushing off the very toughest decisions to a future date. The current stand-off is the result of these incremental maneuvers and delayed decisions.
The Office of Management and Budget asked civilian and defense agencies this week for detailed what-if lists of what they would cut. But many managers have been quietly preparing worst-case plans for months, having grown painfully familiar with uncertainty after a near-government shutdown last year and a slew of stopgap budgets…
[N]ervous employees say they are in the dark about what might happen, and some are downright cynical.
“They cry wolf every time,” said Mike Granger, a Navy computer programmer at the Patuxent River Naval Air Station. “It always ends up being resolved. So I just ignore it.”
The story behind the story is that “tax reform,” as we know it, is dying. During the 1980s, no major piece of legislation better symbolized bipartisan consensus than the Tax Reform Act of 1986, which was regarded by both liberal and conservative experts as the best tax law since World War II. The basic idea was simple: Reduce tax rates and recover lost revenue by ending (or limiting) tax breaks. The struggle between President Obama and House Speaker John Boehner over the “fiscal cliff” indicates that this beneficial consensus has collapsed…
The lower rates and broadened tax base of the 1986 law had explicit goals: to increase economic growth; to reduce the use of taxes to promote some activities and discourage others; to minimize lobbying for tax breaks; and to make the system simpler. With time, the appeal of these goals has faded…
The 1986 law was better than what we have today and, almost certainly, better than what we will have tomorrow. It depended on bipartisan support and White House leadership. There is now little of either.
Polling data indicate that the people simply do not understand the parlous state of public finances—hence the refusal to brook tax hikes to deal with the deficit, or spending cuts in entitlements, the biggest drivers of the nation’s overdrawn account. Little wonder that, after two years of gridlock between two sides that cannot find common ground, the public obstinately refused to break the tie in 2012.
So long as the public continues to send mixed signals, and indeed appears not to fathom the depth of the problem, the two sides will not come to some kind of long-term agreement. Why should they? Better to kick the can down the road until the next election, in the hope that your side can gain an edge.
That points to a grim near-term future for American politics and policy. The fiscal cliff will not be the last showdown between conservatives and liberals on taxes and spending. Given that both factions occupy critical strongholds in the government—the GOP controls the House and a Democrat holds the veto pen—we should expect more of the same: gridlock, recriminations, and periodic crises that necessitate last-minute “grand bargains” that, on closer inspection, are not so grand. This state of affairs will continue until the American people finally decide which side’s approach they favor in dealing with the deficit.
We can and should do more than just extend middle class tax cuts. I stand ready to work with Republicans on a plan that spurs economic growth, creates jobs and reduces our deficit – a plan that gives both sides some of what they want. I’m willing to find ways to bring down the cost of health care without hurting seniors and other Americans who depend on it. And I’m willing to make more entitlement spending cuts on top of the $1 trillion dollars in cuts I signed into law last year.
But if we’re serious about reducing our deficit while still investing in things like education and research that are important to growing our economy – and if we’re serious about protecting middle-class families – then we’re also going to have to ask the wealthiest Americans to pay higher tax rates. That’s one principle I won’t compromise on.