Turn Your Pretty Head and Walk Away
t is assumed that Obama has the upper hand. Unless Republicans acquiesce and get the best deal they can right now, tax rates will rise across the board on Jan. 1, and the GOP will be left without any bargaining chips.
But what about Obama? If we all cliff-dive, he gets to preside over yet another recession. It will wreck his second term. Sure, Republicans will get blamed. But Obama is never running again. He cares about his legacy. You think he wants a second term with a double-dip recession, 9 percent unemployment and a totally gridlocked Congress? Republicans have to stop playing as if they have no cards.
Obama is claiming an electoral mandate to raise taxes on the top 2 percent. Perhaps, but remember those incessant campaign ads promising a return to the economic nirvana of the Clinton years? Well, George W. Bush cut rates across the board, not just for the top 2 percent. Going back to the Clinton rates means middle-class tax hikes that yield four times the revenue that you get from just the rich.
So give Obama the full Clinton. Let him live with that. And with what also lies on the other side of the cliff: 28 million Americans newly subject to the ruinous alternative minimum tax.
Republicans must stop acting like supplicants. If Obama so loves those Clinton rates, Republicans should say: Then go over the cliff and have them all.
A couple weeks ago I took some heat for suggesting that the GOP — as a part of the price of losing, but mostly just to change the subject away from themselves — go on and cave on Obama’s tax hikes “for the rich.”
But as the Democrats dig in and refuse to do anything about our deficits except for hiking taxes, my play is becoming small beer, isn’t it?
Disaster is coming. Why not have it come sooner rather than later, and with the man mostly responsible for it still in the Oval Office? He might not take the blame, but he can sure as hell be made to feel the heat.
This decision isn’t an easy one to make, either. In this case, I’m not just a blogger sitting in my pajamas. My wife’s job could very well be eliminated if the sequester goes through, and she and I we would be two of those 28 million Americans who get socked right between the eyes by the AMT. I’ve taken hits from it before, and it isn’t fun.
A lot less income. A much bigger tax bill. Oh, yeah — I’ve got skin in this game.
But it might just be the only game in town.
Going off the cliff will do a great deal to repair our federal budget. Substantial tax increases and spending cuts are needed anyway, and these are pretty much across the board.
After recovery from the initial recession and stock market drop, the imposed cuts and taxes will gradually reduce the deficit, and we will be once again on Clinton’s course to budget surpluses.
That’s cute, but… no. We won’t be on course.
Clinton’s tax hikes, at a time when the economy was starting to generate serious tailwinds, produced only two-thirds of the revenue Clinton & Congress had expected. (Or had at least promised.) Which inspired the Clinton Rule of Thumb: Under ideal circumstances, tax revenues promised will be one-third less than expected.
Famously, even Clinton admitted that he’d “raised your taxes too high.”
In any case, to get to Clinton-era revenues, we’d also have to go back to a Clinton-era business climate.
Anyone see that happening with Marxian academic in the White House, and the wackos in charge of the EPA and Dodd-Frank enshrining Too Big to Fail?
The only thing Obama learned from the Clinton Rule there is that you have to raise taxes 33% higher than what you want to get what you want.
But that’s the catch, isn’t it? Obama and the Dems will not be blamed. Repubs will take all the heat. And the electorate, the low information Honey Boo Boo voters will believe that, yes, those evil Republicans stopped Obama from doing enough taxing and spending to save us.
If what we need is a new party to challenge the Democrats — one untainted by the fecklessness of today’s new Bob Michels — then GOP suicide is a step in the right direction, no?
I suspect in anything but the absolute best case scenario we would see huge changes in both parties. The GOP may go the way of the Federalists and the Whigs and the Democrats could fracture as well. What comes out of it in a decade or so may even make some sort of sense.
Third parties have a consistent history of failing. I think it’s a better idea to copy the progressive’s success w/ the Dem party. Begin a march through the GOP apparatus and throw out the party apparatchiks and those that are unwilling to fight, really fight, for conservative ideals.
The Tea Party seems to be doing a decent job of starting this.
Right there with you. My boss assures me that we’re safe from the big hits to Defense via sequestration. We supposedly have “all the right contacts”, so none of our current or future DoD contracts are supposed to be vulnerable. But I’m extremely nervous. I’m still pretty low on the totem pole here.
I guess this is kinda like taking one for the team. It may mean personal sacrifice, but if the sequestration, and the potential political fallout, can do irreparable damage to the Dems (and bring back some semblance of sanity to our budgeting process) then I’m game. I’ll find a way to land on my feet.
Of course, it’ll put a serious crimp in my camera budget!
The GOP would be in better shape if it knew what it was about. Anyone can articulate what the Democrats are about in one or two sentences. Can anyone really say that about the GOP? Everything, and I mean everything, they claim to be about they’ve violated when politically convenient. Fiscal responsibility? Wait…I have to catch my breath from laughing so hard. For 40 years the Democrats and the left generally have been intellectually barren, the right and the GOP have been nothing if not confused.
How about this: Focus on growth and remaking the tax code so that it is radically simpler and flatter: Kill deductions; kill them all if possible. Budget increases that come only at the rate of inflation. Federalism.
No serious cuts will come out of these negotiations. The best you can hope for are flat-line budgets and the arguments over how to distribute that will follow.
In these “negotiations”, play for time because Democrats assume they have the upper hand and will win either way: Maybe. But at the 11th hour, I’d pass a clean bill in the House that radically simplifies the tax code and toss it to the Senate and President: Sign it. Otherwise, fasten your belts. Let the voters decide.
Before Nov. 6th I would have agreed with you. But it now seems the voters will keep voting themselves free stuff no matter what. I think they’ll keep voting for the guy that writes them checks even after the check bounces.
Yes, they will, and 40 years of referendums have validated this; not just the past election. The GOP itself has joined in the spending spree, even when they controlled the spigot. However, the spending will dwindle. What cannot continue won’t. The longer game is to put in place what pieces you can. A growth agenda that focuses on a radically simpler and flatter tax code with few if any deductions – preferably none – helps businesses, except for the business of DC lobbyists, the economy generally, and generates revenue at the expense of traditional Democrat constituencies. It flanks Democrats and their constituents because it can be sold in positive way: We aren’t coming to take away your goodies. (Time and reality will take care of that in due course. And yeah, we’ll remind you that we told you so.)
Yes indeed, the American Public is now exactly what the Democrats have hoped for, for 50 years.
The tipping point has finally been achieved, we have been ‘fundamentally transformed”.
We, as an electorate, have been reduced now to the ignorant, zero social skilled, low self esteem, emotionally demolished crack-whore…hand-to-mouth, 24/7 dependent on “that special man” to stay alive…That massiah, who beats us down because “He loves us”, all while forcing us to prostitute our bodies for subsistence level food, while he takes all the money and lives the high life of a pimp, Razor Sharp Pants Crease and all…
We are indeed so damaged, that when a sober responsible person attempt to intervene to prevent our exploitation/humiliation/beating at the hands of this thug, we instinctively attack THEM, in perverted loyalty to own worst enemy.
Barack and the empty promise of the nanny-state.
Barrack, the Whoremaster…
“he’s taking care of me momma…he loves me”
And we will never leave him.
Until we’re dead.
Bring it!
I’m with Krauthammer. Screw it.
The house should pass an extension of the current rates, send it to the senate, then recess. Ball’s in Harry’s court.
As for the sequestration – the democrats own it. If they don’t pass the rates, well they got Clinton rates, which they’ve always wanted.
The republicans are going to take it in the chin no matter what, as will the economy. Why be a party to it?
This week, the white house showed the world that it is fundamentally un-serious about the problem. Honestly, they are too stupid to learn unless something happens to them. So, let it happen. Embrace the suck now.
Too stupid to learn?!?! What feedback has the White House or Senate gotten other than to keep doing what they’re doing?
That’s the point. They’ve had no feedback because nothing tangible (bad) has happened to them.
Any fool with remedial arithmetic and a basic sense of history can see what will happen. They should also be able to, using these tools, reason a solution.
But they can’t. Or won’t. Until collapse, and they eat their own. Which they will.
November 6th proved, sadly, that nothing will happen until all take a ride on the pain train. If republicans were smart, they need to offer a commonsensical plan, and back away. It’s going to blow up anyhow, deal or not, since they will not address spending. Mr. Green had an excellent post this week that spelled it out even for the simplest among us.
This week proved, with Obama’s plan, that we’ve passed the point of no return. Two of the three branches involved here have zero ability to understand, let alone have the will to do what must be done.
I have to agree with what was expressed time and again over at Ace: Let.It.Burn.
This is going to end badly no matter what anyone does. The sooner we face it, the better off everyone will be in the long run.
I also have to chuckle whenever I hear folks rhapsodizing over the Clinton surpluses. Do they remember the Tech Boom/Bubble/Bust that generated all that lovely tax revenue? Why no, no they don’t- only the tax policy made it possible. A business boom had nothing to do with it.
Over the cliff we go with a song in our hearts.
The problem is–what actually made the boom … boom was the free money policy of the Fed. I think it was in ’97 that Greenspan essentially opened the spigots and flooded the market with easy money. The economy took off in a huge way then, because the banks were throwing money at anything that could move. The VCs simply acted as the middle-men. Monetary inflation’ll do that to you.
And that easy money is what we’ve been paying for ever since. Had the Fed’s money policy been a bit more constrained, we would not have seen quite the post Y2K drop-off that we did. It was certainly exacerbated by 9/11. But the landing really would have been much smoother.
And, of course, one of the results of the hard landing was the Fed reversing their policy of tightening that had been instituted in ~2000. That reversal, plus the insane (yet painfully logical) rise of the funny-money real estate market, led to the collapse in ’08.
The tech boom/bust would have still happened, and the real estate explosion/implosion, too. But the Fed’s stupid lending policies made both much more extreme. I’ve never been a gold bug, but I’m pretty much convinced that at least 90% of our economic suffering is due to the Fed mismanaging monetary policy. Even the current fiasco in DC wouldn’t be nearly as catastrophic if the Fed had established early on that they weren’t going to bail out Treasury if Geithner couldn’t sell enough T-Bills/Notes/Bonds to fund the Deficit.
Can you imagine the shit-storm that would have occurred if that had been the message? Epic. On the other hand, Helicopter Ben would have gone down in history as an economic hero.
Imagine that.
Oh, and the number of people coming out lately echoing the “Let.It.Burn.” sentiment is startling, to say the least. I’ve joked about Going Galt, and it is clear that a small segment of the producers are doing just that. But post-Election, the drumbeat has exploded. It has moved from the fringe to become a consistent message amongst a remarkably large portion of the FiCon punditry.
Remarkable.
Remarkable, indeed. But I noted above, the GOP continues to play the current game of chess. What they really need to do is turn over the table and make the everyone play a different game. For God’s sake the revenue obtained from raising the highest marginal rate is pocket money when your running trillion dollar annual deficits and the economy is still flat-lined. It’s sucker’s game to play it at all. Change the topic to something even bigger: the whole damn tax code which is acting like a giant anchor and is a cesspool of corporatism and corruption.
Stephen,
After reading Ace, Allahpundit, Zerohedge, and your recent Doom column, I feel like Stork from Animal house. I really need a motivational speech.
http://www.youtube.com/watch?v=jOnJ2LmdH64
What? Over? Did you say “over”? Nothing is over until we decide it is! Was it over when the Germans bombed Pearl Harbor? Hell no!
Was it over when Lee went to Appomattox? Was it over when the Saigon embassy was evacuated? Was it over when the Marines left Beirut?
Hell… um… oh.
;^)
Don’t interrupt, he’s on a roll.
I have to say, Stephen, I think your first idea was the better one. I think the president wants very much to go over the cliff, and to blame the Republicans for the recession we’re already starting into.
He NEEDS to be able to blame them, to justify his next moves as the result of an intransigent Congress. The Republicans must not hand him the excuse. Sure, he’ll find another one, but it won’t be nearly so convincing.
Shed your debt.
Get healthy.
Learn to live simply.
Buy guns and ammo while you still can.
(The last line courtesy of Mark Steyn)
Maybe the Mayans were right…in anycase if the choice is between standing up for principles or caving in a most craven manor in the vague hope of getting some of the crumbs, well if history is any guide then before Christmas Boehner will proudly announce that he has defiantely accepted all of Obama’s demands.
But if I had my druthers I would go for the cliff. Since the “secret” Boehner/Obama negotiations are leaked before Boehner can hang up the phone he should henceforth do all negotiations publicly via guest editorials in various newspapers and websites. At least he could get out his version of events and force Obama to do the same. For instance: Dear Mr. President, You want the cuts to start sometime in the future; how ’bout the tax increases start then as well? Yours truly, etc.
The Republicans will pay a price no matter what they do. The House members that agree to new taxes will probably face a primary opponent and perhaps a tea party oppenent in the general if he survives. If the cliff is chosen, then we know how the media will react.
But let’s say we go off the cliff. Come January the Republicans come in and offer new taxes…new taxes on those that are not our friends. Meanwhile everyone is hurting and there will be great pressure to make a deal, on everyone. Everyday new taxes are offered, to mitigate the effects on the drastic cuts in Medicare that will be required. Boehner could keep negotiating in public (he will need some good speechwriters) and the pressure will flow to ALL parties.
The effect would be to get the cuts immediately and the Republicans may be in a better bargaining position to trade cuts in Medicare for cuts in the EPA, farm subsidies, the Department of Redundancy Department, etc. Meanwhile everyone gets to see that raising taxes hurts someone (themselves).
But that ain’t gonna happen. Look for Boehner’s Christmas gift.
Some would say this has been his intent since being elected:
http://en.wikipedia.org/wiki/Cloward%E2%80%93Piven_strategy
Can anyone think of anything he’s done otherwise?
Salvation lies in a civically educated electorate and an honest media. We no longer have either.
I don’t have the money to shed my debt, but will go the guns and ammo route with what I have.
It’s time for the GOP to reform or die. Consider some of the things the GOP currently stands for:
* Subversion of the 4th, 5th, 6th and 8th Amendments of the Bill of Rights, through the NDAA and the Patriot Act.
* Subversion of the 10th Amendment, in the name of stopping gay marriage and drugs.
* Describing reductions in the rate of spending growth as “cuts” in spending, just like Democrats do.
* Describing reductions in the rate of spending growth (also known as cuts) as something which will automatically cause a recession, just like Democrats do.
* Cheating in their own caucuses and primaries, shunning independent-minded candidates, excluding 3rd parties, and gerrymandering, just like Democrats do.
* Federal control of education, just like the Democrats.
* FEMA and Homeland Security, just like the Democrats.
Two questions:
Should the people not have another option, when both major parties agree on pivotally important issues?
What about the party described above is worth preserving?
It is time to get creative.
The Republicans in the House and Senate should just vote “Present” and let the Democrats own the whole thing. (After all, if it worked for an Illinois state senator, it might just work for the Republicans.)
Unconventional? Yup.
Childish? Maybe a bit too much.
Radical? Yup.
Give Democrats cover? Not one square inch.