I haven’t written lately about fiscal-cliff negotiations, as, frankly, not much has happened in the last two weeks, other than a slow trickle of Republicans seeking daylight between themselves and Grover Norquist. For the most part, Congressional Democrats are digging in on entitlements, while Republicans are holding firm against increasing rates on anyone, including those making $250,000 or more a year.
On CNN last night, Sen. Rand Paul, who is among the few GOPers willing to accept cuts in military spending as part of a fiscal-cliff compromise, was admirably honest about why Republicans refuse to de-link tax rates for the wealthy from those for everyone else:
Once you separate them out, there’s not a lot of sympathy among the public for rich people. They say, ‘Oh, let’s get those rich people.’ But the public often doesn’t realize … the top one-percent pay almost half of all the income tax.
To be fair, Paul is making a substantive argument: the rich already are “soaked” enough, and if Obama thought it was a bad idea to raise taxes in 2010, why does he think it’s a swell idea now? But his initial reasoning is more nakedly political: he’s admitting that a stand-alone vote on preserving the Bush tax rates for the wealthy would make Republicans look really, really bad.
Paul is right about this — and doubtless Obama knows it. The knife is in. And he’s beginning to twist it:
Right now, as we speak, Congress can pass a law that would prevent a tax hike on the first $250,000 of everybody’s income. Everybody’s. And that means that 98 percent of Americans and 97 percent of small businesses wouldn’t see their income taxes go up by a single dime. …
Even the wealthiest Americans would still get a tax cut on the first $250,000 of their income. So it’s not like folks who make more than $250,000 aren’t getting a tax break, too. They are getting a tax break on the first $250,000 just like everybody else. Families and small businesses would, therefore, be able to enjoy some peace of mind heading into Christmas and heading into the new year.
It’s far from clear whether Obama’s appetite for brinkmanship is big enough to go over the cliff. It seems to me he would prefer a second term that’s defined by steady economic growth and job creation as opposed to a self-inflicted double-dip recession. But to paraphrase the freshly reelected President Bush in 2004, Obama has leverage, and at least for now, he intends to wield it.