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The Game to Play Is Compromise Solution

Talking to plugged-in Republicans over the weekend, I got a couple overarching impressions. The first is a real, and not merely theatrical, pessimism that lawmakers in Washington are going to be spending Christmas with each other, and that we very well may go over the “fiscal cliff.” Republicans see in these negotiations an asymmetry of incentives. It’s not simply that President Obama has more leverage than House Republicans, or that he “holds all the cards,” or that he’s willing to go over the cliff. It’s that Obama wants to go over the cliff. He gets what he’s after with no resistance: more revenue, cuts to defense, and entitlements untouched.

Does he want millions of taxpayers to get hit with the Alternative Minimum Tax? Rates to go up on the middle- and working-class? Worse still, another recession? Of course not. But, as Bill Kristol writes [1], Obama knows that,

Republicans will fold with lightning speed after we go over the tax cliff on January 1. … If we go over the cliff, there won’t be damage to Obama’s chances of second-term success. Quite the contrary. What Republicans will have done is to make Democrats the party of tax cuts and Obama a president fighting for economic growth. As I say, it won’t happen. Most Republicans will go along soon after January 1 with what will now be the Democrats’ tax cutting agenda.

Which brings me to the second impression I’m getting from Republicans: they’re anxious about how the cliff battle might fracture the party [2]. They compare hardline conservatives’ refusal to compromise, in some fashion, to the 1995 government shutdown.

They believe Obama won’t be satisfied with a favorable deal; they believe he wants to drive a stake through the heart of the Republican party.

Negotiations over the cliff are now down principally to House Speaker John Boehner and President Obama [3]. A fly on the wall might hear something like the following exchange between the two men:

“Mr. President, we’ve put revenues on the table; we’ve compromised; it’s time for you to move toward us.”

“Mr. Speaker, I’m not sure your caucus has moved toward you. How ’bout we wait a couple more weeks?”

As I noted earlier, these are impressions. I remain stubbornly optimistic that the basic elements of a deal are in place [4]. Can they push it through before Santa’s sleigh takes off?

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#1 Comment By Besomyka On December 10, 2012 @ 11:20 am

Curious. I would have thought that more moderate Republicans would, deep down, want to go over the cliff as well since it would make it politically tenable to make the compromise needed.

#2 Comment By reflectionephemeral On December 10, 2012 @ 11:43 am

It’s that Obama wants to go over the cliff. He gets what he’s after with no resistance: more revenue, cuts to defense, and entitlements untouched.

Man, I don’t know about that. Talking to plugged-in Democrats over the weekend, they were talking about what a nightmare the austerity crisis would be for their priorities.

To be fair, though, that’s House people I was talking to; maybe things look different from the White House.

Also, is it fair to say that Boehner has “put revenues on the table”? His proposal would change the way we calculate inflation, which would lead to more households paying higher rates. But other than that, is there anything more specific than “we’ll close unspecified loopholes, somehow”?

#3 Comment By Scott Galupo On December 10, 2012 @ 1:33 pm

RE,

Again, I’m just passing along what I’ve been hearing. Consensus seems to be that if we do go over, we won’t “fall” very far or for very long. And on revenues and whether Rs have truly put them on the table, I’m repeating a talking point and imagining what Obama might say in reply.

Scott

#4 Comment By Dakarian On December 10, 2012 @ 1:35 pm

This is something I sort of realized recently when I imagined two people attempting to make a compromise out of this: Republicans really are in a bind.

The issue is that it’s not like a car. When you barter for a car, the seller wants it off their lot and the buyer wants to drive home: both lose if the sale doesn’t happen. Now they are both willing to lose if the alternative is worse (selling the car for $5, buying a lemon) but still, they only can gain if the deal happens.

Here, both want to keep taxes low on the lower end. Giventhat, assume that’s added in right now. So now what? Obama wants to raise taxes on the upper end, Republican want to keep it low. If they don’t deal then…the taxes go up.

Obama wants to cut military. Not by 300 billion, by 45 billion a year. Republicans want no cuts. neither want the rest of the 255 billion in cuts.. so assume that’s removed (either via a deal or after the 300 billion Obama asks to reraise by 255). Deal doesn’t happen.. the cuts occur.

See the issue. Only thing Republicans can do here is evoking MAD: be willing to give up even MORE of what they want just to hurt Democrats, or get a little of both sides want and a little of what Democrats want. There’s no room for them to move.

Which makes you wonder: Why did this get setup? Why didn’t Republicans push to make the cuts permanent? Why put Sequestration on the same timeframe as the mass of other items set to expire? The only thing I can think of is political: Let everything fall off the cliff, then Romney puts it all together again with the same leverage people say Obama would gain.

If that’s true, then that’s betting the country to play politics. I’m going to assume that’s not true. I make a point to not follow mindsets that make me HATE a politician or a political group, and I’d break that ideal if I allowed myself to think that’s what they planned.

As far as the current solution.. compromise might be the best option and NO, “we’ll do ..something..some other time” isn’t compromise. Be specific, get it to the public. Try to get some public points to see if you can evoke Obama to pull back again.

Other than that, it’s jumping the cliff, then stonewalling any attempt at rebuilding from it, which is a gamble that may doom the party. otherwise, once you jump, Obama will use that leverage and the deal you get then may be worse than what you could get now. Also, if you dare let Democrats be able to say “We lowered taxes AND did spending cuts” and not get a Pants on Fire at politico, the party really IS doomed.

#5 Comment By reflectionephemeral On December 10, 2012 @ 9:24 pm

Fair enough, on both counts. Am genuinely curious as to truth of matter, on each. I don’t know the answer to either.

Thanks for replying.

#6 Pingback By The Digest | Tony Johnson On December 11, 2012 @ 5:11 am

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#7 Comment By Jeff On December 11, 2012 @ 10:47 am

I’ve vaguely imagined this site represented the paleo/fiscal conservative position? I guess not however.

If you support a balanced budget, then you must support going over the fiscal cliff. There are no politically acceptable compromises that move towards a balanced budget, none. An across the board 10% budget cut does wonders for reducing government waste though. Let us make that happen as permanently as possible please!

There are definitely economic concerns with going over the fiscal cliff for too long, but those could be addressed with mild stimulus spending, and they could wait many months. Take the 10% cut and tax hike now, figure out the spending that absolutely must be reinstated, and reinstate it later, preferably much later.

It’s fiscal conservatives like Ron Paul who benefit ideologically from the fiscal cliff, not the Obama administration. In fact, I suppose Obama must be largely indifferent since he’s reelected, but obviously he’d sign a deal he liked. We fiscal conservatives will not be offered any deal this good any time soon.