What Fiscal Crisis?

12.19.12

Fiscal Cliff Overshadowed by Newtown Tragedy

The horror of Newtown has made the budget crisis appear small. Howard Kurtz on why both Democrats and the GOP are suddenly keen to avoid the fiscal cliff.

Maybe it was just a coincidence.

Maybe both sides were just posturing before the inevitable deal-making began.

But I believe the Newtown tragedy had an impact, however subtle, on the endless fiscal-cliff negotiations.

Now that President Obama and House Speaker John Boehner seem to be inching toward a deal, it’s worth examining how the political landscape has been transformed.

The fiscal cliff itself is an entirely manufactured crisis. The Dec. 31 deadline for automatic tax hikes and spending cuts was set by Congress itself to resolve the last artificial crisis, the battle over the debt ceiling. The so-called showdown could have ended at any time with a bit of political compromise.

Suddenly America was confronted with a real crisis, a massacre at a Connecticut elementary school. There was an outpouring of grief, a deep wound to the national psyche, an anguished debate over how we can protect our young children.

Against that backdrop, the spectacle of squabbling politicians unable to resolve basic budget questions even after a presidential election was particularly appalling. Questions of life and death made them look small. And I bet, on some level, both parties realized that.

Suddenly, no one was paying attention to their game-playing. The searing spotlight was on Newtown, not Washington. And these elected officials were about to deliver a Christmas present in the form of a major tax increase?

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Boehner acknowledged as much, saying that in light of the school shooting, “it’s not a time to put Americans through more stress.”

When Obama and Boehner met for 45 minutes of talks at the White House on Monday, the president had just returned from what must have been an emotional visit to Newtown, where he comforted families of the victims and spoke of how to prevent such mass shootings. The cliff, at that moment, must have seemed like more of a small hill.

The House speaker made the first move when he spoke by phone with Obama on Friday, the day of the shootings. He offered to raise taxes on those earning $1 million or more, rather than the president’s preferred level of $250,000 and up. It is hard to overstate the magnitude of this concession for the Republicans, who have made it a mantra never, ever, to raise taxes rates on anyone, ever. Now they were just arguing over the price.

As part of the deal, Boehner wants to change the inflation formula to slow the rate of growth in Medicare and other federal health programs, an area close to Democratic hearts.

Suddenly, no one was paying attention to their game-playing. The searing spotlight was on Newtown, not Washington.

During their Monday meeting, Obama countered by offering to limit the tax hike to incomes over $400,000. This, too, was a significant concession, because Obama spent the entire campaign repeating the 250K figure. He arguably had a mandate for that position, and if he refused to bargain, the GOP probably would have had to cave rather than inflict a tax increase on the remaining 98 percent of taxpayers.

On the spending side, the White House is offering to make cutbacks of $930 billion over 10 years while raising revenue by $1.2 trillion, which Boehner says is unbalanced.

Now we are back to the maneuvering phase, with Boehner threatening to pass the millionaire’s tax hike on his own as a Plan B, mainly to make a political statement, and Democrats are vowing to block that approach. The fragile talks could fall apart because, well, these people are far better at arguing than they are at compromising.

But then they would have to explain why they are taking the country over the fiscal cliff when America is still distraught over the senseless deaths of 20 children. In short, they would have to justify why they are acting like children. And that would be a very tough sell in this somber season.