The debt-ceiling showdown, which threatened to send the country into default, kept us enthralled. But the fiscal cliff won’t plunge us into a recession on Jan. 1. Howard Kurtz on the mass tune-out.
From the outside, it must appear that Washington is gripped by high drama as the country faces the daunting prospect of plunging over the fiscal cliff.
Um, not exactly.
We’re as bored as the rest of the country. People aren’t chatting about this at the coffee machine or arguing the angles over lunch. The cliff notes are just background noise, humming along at far lower volume than the roar that greeted Robert Griffin III’s latest Redskins performance.
It’s not just that the budget negotiations are far less sexy than, say, Kate Middleton having a baby or David Petraeus’s Gmail account. This is Beltway territory; we thrive on dull-as-dishwater debates.
And it’s not just that sophisticated news consumers have divined that the fiscal cliff isn’t really a cliff, that the country won’t plunge into a recession on Jan. 1 even if taxes go up and spending is slashed, as a compromise can always be hammered out in the following weeks.
The real reason for the mass tune-out is that the players haven’t gotten serious. This is like the layup drills before an NBA game, and no one is keeping score. Both President Obama and John Boehner’s Republicans are in the posturing phase, playing to their bases, and offering virtually nothing to the other side.
Here’s what passes for news: John says the talks are going nowhere. John refuses to take a holiday photo with Barack. Wait, Barack and John are talking on the phone and excluding Mitch and Nancy! Hey, John and Barack huddled at the White House on Sunday—that must mean something, right?
Democrats are the party of entitlements, but an overlooked irony in the fiscal cliff stand-off is that it’s the Republican-designed Medicare Part D prescription drug benefit that threatens to explode entitlement costs, by as much as $1 trillion in 10 years, writes Dan Gross.
Fiscal Cliff Hostage Situation. Day 31. There was little progress on a slow Friday.
But as we contemplate the fiscal cliff, and the very contentious issues surrounding taxing and spending, it’s worth stepping back to look at the big picture.
Here’s another way of looking at the conflict. The Democrats want to protect the really expensive social welfare entitlements they created many years ago, like Social Security and Medicare. These are among the Democratic party’s greatest legislative achievements of the 20th or any century. Hence the Democrats are the party of entitlements. Republicans, for their part, want to protect their greatest legislative accomplishment in recent history: the Bush-era tax cuts. Hence the Republicans are the party of tax cuts. And that explains why both sides are so reluctant to cut a deal, and so eager to exact a heavy price. Democrats want Republicans to sign off on and participate in the partial destruction of the Bush tax cuts. Republicans want Democrats to sign off on and participate in the partial destruction of Social Security and Medicare. What’s needed isn’t just a compromise, but a willingness to tarnish both parties’ legacies.
The Republicans are particularly wedded to this view. Harvard political scientist Harvey Mansfield recently told The Wall Street Journal, “We have now an American political party and a European one.” The Democrats (the Europeans, in case you couldn’t guess) are for entitlements, which are bad. “Entitlements are an attack on the common good,” Mansfield said. And in the Republicans’ view, Obamacare simply adds to the list of costly, expensive entitlements that Democrats have passed over the years.
Of course, this worldview overlooks a couple of very important points. Yes, Social Security and Medicare are expensive entitlements. But they were created with financing mechanisms—payroll taxes—that were designed to fund them all (in the case of Social Security) or in part (in the case of Medicare). Obamacare also partially funds itself through taxes. So when they created open-ended, popular entitlements, Democrats proposed and enacted unpopular ways to pay for them.
But several years ago, when the Republicans led the charge to create a huge, new, open-ended entitlement, they simply refused to fund it at all. And because the cost of that particular entitlement is rising more rapidly, the failure to do so is contributing significantly to deficits over the coming decade.
I’m talking, of course, about the Medicare Prescription Drug benefit, known as Medicare Part D. It was passed in 2003, and could be described as a “gift” to the elderly in advance of the 2004 election. The notion was that the government would pay for all or a chunk of the increasingly expensive drugs that the world’s pharmaceutical companies had concocted to improve the quality of life.
A month after the election, the Senate is a forum for performance art, CEOs are throwing money away—and Obama and Boehner appear stalled. Things aren’t looking good, writes Daniel Gross.
Fiscal cliff hostage situation. Day 30. It was a day for dada and futile symbolic gestures.
U.S. Sen. Jim DeMint (R-S.C.) talks on the phone in his office on Capitol Hill on Thursday. DeMint announced that he will resign from the Senate to become the president of the Heritage Foundation. (Alex Wong / Getty Images)
Jim DeMint, Republican senator from South Carolina, Tea Party favorite, scourge of the Washington establishment, up and quit his post—to become head of ... a Washington institution, the Heritage Foundation. Heritage, it will be recalled, helped come up with the idea of an individual mandate for health insurance many years ago. And so DeMint, an implacable foe of Obamacare, will now get paid to run the organization that helped incubate Obamacare.
In the Senate, which increasingly resembles a forum for performance art, Americans were given a lesson in civics. Senate Minority Leader Mitch McConnell in 2011 had proposed a solution to the warfare over the debt ceiling. Congress would pass a law that would let the president raise the debt ceiling on his own. Then Congress could vote to disapprove and stop him from raising the debt ceiling. But the president could then veto that measure, and the override attempt would fail. So, everybody would be happy: the president would get his debt, and Congress would get its outrage. Today, McConnell, in an effort to taunt Democrats in the Senate, introduced the measure and challenged the Senate to vote on it. He figured Democrats would think it was a bad idea. But when Democrats took him up on the offer and agreed to vote, McConnell decided it wasn’t a good idea after all. And so he filibustered the legislation he had just introduced.
The debt ceiling, of course, has precisely nothing to do with avoiding the fiscal cliff or tax reform. And President Obama, buttressed by his newly discovered spine, has essentially said as much. As he said Wednesday: “If Congress in any way suggests that they’re going to tie negotiations to debt-ceiling votes and take us to the brink of default once again as part of a budget negotiation—which, by the way, we had never done in our history until we did it last year—I will not play that game.” So in other words, the Senate spent the day arguing about a part of the fiscal cliff deal that the president says can’t be a part of the fiscal cliff deal. (#dada)
Meanwhile, in corporate America, preparations for the fiscal cliff continued. Chief executive officers have been thronging the Home Depot and Lowe’s, buying up the biggest shovels they can find. And they are putting the tools to work, shoveling cash out the door in the form of (lightly taxed until Jan. 1, 2013) dividends. Late Thursday, McGraw-Hill, the parent company of Standard & Poor’s, said it would pay out a special $2.50-per-share dividend (about $700 million) on Dec. 27. CEOs may be a little slow on the uptake, but they can clearly see that the current low rates on dividends are not going to survive the cliff.
In Washington, we are told, formal talks between the two parties that must make a deal—Obama and House Speaker John Boehner—resumed after a week of silence with a telephone call. Staff-level talks continued. Very little word leaked out. It could mean that they were doing nothing. But it could also mean that they are doing something. As Rick Klein of ABC News (@rickklein) tweeted: “Very litle news committed on #fiscalcliff today. which probably means the most productive day yet on negotiations.”
As the sun set on day 30 of the fiscal cliff hostage crisis, I went out into the front yard, scared off the deer, and tied a yellow ribbon around the old oak tree.
According to Geithner.
Don’t they know everyone texts now? In the latest round of back-and-forth on the fiscal cliff, President Obama and House Speaker John Boehner talked on the phone Wednesday and announced they will soon have a face-to-face meeting. But don’t get too excited: there was no announcement of any deal—or even any hint of a compromise. Meanwhile, Treasury Secretary Timothy Geithner told CNBC on Wednesday that the president is “absolutely” ready to jump over the fiscal cliff if Republicans won’t budge on tax hikes for the wealthiest Americans.
President Obama on Wednesday took his campaign to raise taxes on the top 2 percent of earners to opponents at the Business Roundtable, as some Republicans are talking surrender.
Fiscal cliff hostage situation. Day 29. It’s starting to get like the Donner Party. The weaker members are starting to succumb.
Delaware Governor Jack Markell (L), Chair of the National Governors Association's Executive Committee, US President Barack Obama (2L), Oklahoma Governor Mary Fallin (3L), Vice Chair of the National Governors Association's Executive Committee, U.S. Secretary of the Treasury Timothy F. Geithner (4L), Wisconsin Governor Scott Walker (5L), Minnesota Governor Mark Dayton (3R), Utah Governor Gary Herbert (2R), and Arkansas Governor Mike Beebe (R), and others wait for a meeting in the Roosevelt Room of the White House Dec. 4, 2012, in Washington, D.C. Obama and Vice President Joe Biden met with state governors to speak about impending tax hikes and speeding cuts dictated by the Budget Control Act of 2011 if Congress cannot compromise on reducing the budget's deficit. (Brendan Smialowski / Getty Images)
Tony Fratto, the former Bush press official and power-tweeter, sent out a 140-character plea for surrender of a sort. “I don’t think Clinton tax rates are ideal, but we did live with them for eight years. Just return to them and start over next year.” Rep. Kay Granger, a Republican from Texas, said it might make the most sense just to extend the Bush-era tax cuts for everybody except the top 2 percent of earners, and move on. By nightfall, Granger had yet to be challenged to a duel.
The Democrats, emboldened, didn’t shrink from delivering their message directly to audiences that might be somewhat hostile. Treasury Secretary Tim Geithner went on CNBC, which has been running a campaign urging Congress and the White House to “rise above” the fiscal cliff, and reiterated the administration’s stand that taxes on high-income earners must go up. If not … well, then the administration was prepared to join the Thelma & Louise Caucus. In response, the stock market rose. Go figure.
President Obama went into what might be considered more hostile territory. He ventured out to the Business Roundtable, a group whose CEO members likely spent lots of time and effort trying to defeat the president earlier this fall. Obama told them that, in effect, there were no hard feelings. However, he was really intent on seeing that taxes on CEOs rise—and fast. “So what we’ve said instead is let’s allow higher rates to go up for the top 2 percent—that includes all of you, yes, but not in any way that’s going to affect your spending, your lifestyles, or the economy in any significant way.” Later in his remarks, he assured them that “We’re not insisting on rates out of spite, but rather we need to raise a certain amount of revenue.” (Pro tip: when someone says they’re not doing something out of spite, it’s probably a safe bet there are a few drops of spite involved.)
Obama went on to tell the dealmakers that if he could get Republican leaders to realize the reality that higher revenue could be paired with entitlement cuts, “then the numbers actually aren’t that far apart.” He continued: “Another way of putting this is we can probably solve this in about a week; it’s not that tough.” (Full disclosure: I’m short Republican leaders realizing reality.)
The Obama administration went out of its way to present a hardened position. White House spokesman Jay Carney noted that the Office of Management and Budget is preparing for the sequester that would take place in the event we went over a fiscal cliff. No serious talks were reported. Boehner held a press conference in the afternoon and pleaded for the president to submit a revised proposal. “We’re ready and eager to talk to the president and work with him,” Boehner said, in a less-than-convincing tone.
There was a brief fillip in the afternoon when it was reported that Obama and Boehner had spoken on the phone. My guess? It was a case of butt-dialing.
The view from that cliff isn’t looking so bad on Wall Street. Despite the dire warnings from Washington about the lack of a deal to prevent the so-called fiscal cliff, Wall Street investors are pretty much unfazed. With a few exceptions, the stock market has remained fairly static since the election—despite taking a nosedive immediately afterward. “Wall Street and Washington are different worlds and speak in different languages,” said one analyst, Chris Krueger. Analysts almost universally agree that a recession is likely if no deal is made to prevent the automatic draconian spending cuts from taking effect and the Bush tax cuts from being repealed—some have indicated that the short-term consequences would not be quite so dire.
Republicans routinely repeat Reagan’s claim that Democrats reneged on a 1982 promise to cut spending in exchange for raising taxes. It’s a myth.
The White House has now proposed a plan to raise taxes immediately and work out spending cuts in the near future. Republicans are rejecting this, calling it insulting and, in Mitch McConnell’s words, “a step backward.” In defense of their position they cite Ronald Reagan’s experience, claiming that he once made a deal with Democrats for $3 in spending cuts in return for $1 in tax increases. The Democrats got the taxes, they say, but Reagan never got the cuts. Republicans—and Grover Norquist in particular—have repeated this so often and so insistently that even Democrats seem to have accepted it as truth. The only problem? It’s a myth.
President Ronald Reagan delivers the State of the Union address before a joint session of Congress in Washington on Jan. 26, 1982. (AP Photo)
Here are the facts, complete with context:
In August 1981 Republicans controlled the Senate and had enough power in the nominally Democratic House to pass Reagan's enormous tax cuts. (Southern Democrats occupying soon-to-become Republican seats gave Reagan working control of the House and voted for the cuts. In fact, Phil Gramm was the then-Democratic sponsor of the tax-cut bill in the House. He switched parties soon thereafter and became one of the most conservative Republicans in Congress.) Despite the tax cuts, a recession started in July 1981. Reagan did inherit the so-called stagflation of high inflation and slow growth, and there was a brief recession in the first half of 1980. But the economy was growing when he came into office.
The deficit promptly soared—indeed, the national debt would ultimately triple in Reagan’s eight years in office But the economy tanked and unemployment headed toward double digits. In early 1982, concerned by this exploding deficit and convinced that the tax cuts had gone too far, Congress on a bipartisan basis moved to limit the damage. Despite outcries on the right that one could not raise taxes in a recession, advocates said that bringing down the deficit was more important.
In August 1982, the unemployment rate hit 10.1 percent, while mortgage rates hovered near their all-time high at 15 percent. Reagan's tax cuts had had a year to stimulate the economy, but they had not done so.
So Republicans in Congress and some members of his own administration convinced Reagan to agree to a $98.3 billion tax increase, the largest peacetime increase in history. Despite current Republican claims, however, Congress did not make a “deal” to cut $3 in spending for every $1 in tax increases, although—to quiet criticism from the right—the White House began saying that there was. As Bob Dole told then–house budget chair Bill Gray, there was a deal but it was between Reagan and his speechwriters.
The agreement was in fact supposed to bring total spending down by $284 billion. But less than half of this amount involved cuts in appropriations or entitlements, or for that matter any congressional action at all. The Reagan administration promised to cut $47 billion in spending through "management savings" by cutting everyone's favorite target: waste, fraud, and abuse. No savings in this area ever materialized. (This was another “magic asterisk” from OMB Director David Stockman, much like the famous “savings to be identified later” in his first budget.) In addition, $108 billion was to come from lower interest payments, since interest rates were projected to fall. That left about $130 billion in appropriation cuts for Congress to make.
Daniel Gross reports.
Fiscal cliff hostage situation. Day 28. As often happens in hostage situations, a sense of ennui enveloped the participants. The hopes that a formal Republican offer, extended by House Speaker John Boehner on Monday, would kick negotiations into higher gear proved out to be false. The two protagonists didn’t meet. The stock market, that finely tuned barometer of reality and predictor of future events, pronounced itself utterly bored with the proceedings. The Dow Jones Industrial Average ended down 13.82 points, off 0.11 percent.
Obama and Vice President Joe Biden met with state governors to speak about impending tax hikes and speeding cuts dictated by the Budget Control Act of 2011 if Congress cannot compromise on reducing the budget's deficit. (Brendan Smialowski / Getty Images)
But the day wasn’t completely uneventful. President Obama sat for an interview with Bloomberg Television, which caused thousands of people who don’t live in the Acela corridor to turn to each other and ask, “What’s Bloomberg Television?” Obama, emboldened by his election victory, stood his ground. The Republican offer, he said, was unacceptable because it didn’t raise rates on the highest earners and because the math didn’t add up. He did offer something of an olive branch. Some time next year, he said, he could “look at what loopholes and deductions both Democrats and Republicans are willing to close, and it’s possible that we may be able to lower rates by broadening the base at that point.” But that would take place only after rates on the wealthy had risen.
Elsewhere in Washington, the Republican circular firing squad began to assemble. Many conservatives were upset with Boehner’s offer to raise revenues by $800 billion as part of a deficit reduction deal. “Speaker Boehner’s $800 billion tax hike will destroy American jobs and allow politicians in Washington to spend even more, while not reducing our $16 trillion debt by a single penny,” thundered Sen. Jim DeMint of South Carolina. The Heritage Foundation complained, “It is bad policy, bad economics, and, if we may say so, highly questionable as a negotiating tactic.”
Some Republicans pronounced themselves horrified with the contents of Boehner’s proposal. Democrats, for their part, pronounced themselves flummoxed with the lack of content in Boehner’s proposal. For example, while the speaker said he could live with $800 billion raised through capping or eliminating deductions, he didn’t specify a single deduction he would cap or eliminate. As Obama noted to Bloomberg: “When you look at how much revenue you can actually raise by closing loopholes and deductions, it’s probably in the range of $300 billion to $400 billion. That’s not enough to come up with a balanced plan that actually reduces the deficit and puts us on the path of long-term stability.” The lack of specificity led White House spokesman Jay Carney to dub the plan “magic beans and fairy dust.” (Coincidentally, Magic Beans and Fairy Dust is the name of a new coffee shop in Williamsburg, Brooklyn.)
So as night fell on Day 28 of the Fiscal Cliff Hostage Situation, the press was left pondering existential questions. If there is no picture documenting a meeting of the president and his chief negotiator at the White House Christmas party, did they actually meet? And if you submit a “plan” to increase revenues but it doesn’t explain how you will increase revenues, is it still a plan?
Meanwhile, troubling evidence emerged that the president may not be a man of his word. He told Bloomberg, in response to a question about the Susan Rice controversy: “I—you know, I don’t really spend a lot of time on, you know, what folks say on cable news programs.” But evidence quickly emerged that he does. Tuesday afternoon, Obama held a meeting with a bunch of folks who appear on cable news programs, including Arianna Huffington and several MSNBC hosts.
Think Obama’s tax-hike bill can to pass the lower chamber of Congress with a majority of votes? Think again. Michael Tomasky on how the GOP plans to protect its wealthy donors.
As you ponder whether the Obama tax hike can pass the House, I bet you think something like, “All he needs is a few Republicans.” Right? I wouldn’t blame you for thinking it. Obama himself said last week: “If we can just get a few House Republicans on board, we can pass the bill in the House, it will land on my desk, and I am ready—I have got a bunch of pens ready—to sign this bill.” That’s how it works, right—218 votes? Friends, you’re hopelessly behind the times. The Republicans won’t allow measures to pass with just any 218 votes. It has to be mostly Republicans. Welcome to the little-discussed but possibly pivotal concept of the “majority of the majority.”
Speaker of the House Rep. John Boehner takes questions during a news conference November 30, 2012 on Capitol Hill in Washington, DC. (Alex Wong / Getty Images)
What does this mean? Pretty much just what it says: For Speaker John Boehner to bring any measure to the House floor, he has to see that a majority of the majority—that is, a majority of his GOP caucus—will support it. You might have in theory a bill that could pass with the support of 109 Democrats and 109 Republicans to reach the needed 218. You couldn’t ask for more bipartisanship than that. But 109 is not a majority of 241, so if Boehner and his whips were counting noses accurately in the run-up, this perfectly balanced measure would never see the light of day for a vote.
Sounds like madness? Yes, it does, and it is. But surely this is something, you say, that goes back a ways, and something both sides have done. Well, not really. It goes back, says congressional scholar Norman Ornstein, only to Denny Hastert, the GOP speaker during the Bush years who was the first to use the phrase. “It was a Hastert original,” Ornstein explained to me Monday. “In earlier eras, it would never have worked—too much heterogeneity in caucuses, to start. Hastert was a different Speaker, in another sense, seeing himself as more a field general in the president’s army than as first and foremost leader of the independent House, but to him that meant creating a majority party machine. More than anything, it formed the parliamentary party mindset.”
Sarah Binder, the congressional scholar at Brookings, notes that in fairness, the pseudo-parliamentary mindset began to develop in the 1970s and 1980s. “I think its parliamentary roots actually stem from liberal Democrats’ effort to challenge the power of conservative committee chairs who dominated the House agenda for a good portion of the 20th century,” Binder says. The Democrats started using the powerful House Rules Committee more aggressively to control the flow of what could and could not get to the floor.
So the Democrats certainly managed the action, but all we have to do is look at history and see that the Democrats didn’t follow this majority of the majority nonsense. Exhibit A: NAFTA. It passed with a minority of the Democratic majority but an overwhelming majority of Republicans.
Nope—it was Republicans who instituted this noxious rule, during the Bush era, probably at Karl Rove’s behest, to ram through every wedge issue they could. Just another manifestation of turning legislating into warfare by other means and making compromise impossible. In spirit, it’s like a House version of the filibuster. A minority of the body gets to block the potential will of a majority, and on a purely and unashamedly partisan basis.
So what does it have to do with the fiscal cliff? It means that you can forget the idea of 20 or so non-wild-eyed Republicans joining the Democrats in passing the higher tax rates. As Republican Tom Cole said last week—and Cole, remember, is one of the reasonable ones here, one of the few GOPers who has declared that he’d vote with the Democrats on such a measure: “You’re not going to come up here and be able to put together a deal with 170 Democrats and 40 Republicans—that’s just not in the cards.” The number, for the record, would have to be at least 26 Republicans in December. If they wait until the next session starts in January, the required number would go down to 18, since the GOP lost eight seats in the election.
Washington politicians once knew the art of giving a little to get a little. With budget talks mired in partisanship and the fiscal cliff looming, it’s high time that legislators and the White House relearn that vital skill. By Mark McKinnon and William A. Galston.
Since August of 2011, when a last-minute deal barely averted a default on our national debt, every policymaker has known exactly what would happen on Jan. 1, 2013, if the two political parties failed to reach agreement on long-term fiscal policy. Taxes would rise substantially for all Americans, and massive across-the-board spending cuts would go into effect. This is an outcome that hardly anyone wants. In fact, it was designed to be so unacceptable that both parties would have an incentive to negotiate seriously and resolve their differences.
House Speaker John Boehner of Ohio speaks to reporters in Washington on Nov. 29, 2012, after private talks with Treasury Secretary Timothy Geithner on the fiscal-cliff negotiations. Boehner said no substantive progress has been made between the White House and the House in the past two weeks. (J. Scott Applewhite / AP Photo)
This has not happened. After the deal on the debt ceiling, both parties abandoned the attempt to govern the country and instead attacked each other relentlessly for more than a year. The 2012 election, though hard fought, did more to obscure than to clarify the choices we face. And the outcome of the election didn’t resolve those choices one way or the other. While President Obama won reelection and Senate Democrats expanded their majority by two seats, the voters left the House of Representatives under Republican control, with a majority only modestly reduced from its huge gains of November 2010.
The parties remain both deeply divided and closely divided. Neither can simply impose its will on the other, and neither is likely to surrender. To be sure, politicians can try to calculate who has a short-term tactical advantage, but that won’t tell them much about the long-term political consequences of failing to reach an agreement. To resolve the fiscal debate, the parties will have to negotiate seriously and in good faith, and they will have to compromise.
Just days after the 2012 election, the majority and minority leaders of the House and Senate met with the president in the Oval Office and emerged professing confidence in their ability to work together to resolve our country’s problems—starting with the looming fiscal crisis. House Speaker John Boehner suggested some new flexibility in his caucus’s longstanding opposition to revenue increases from any source other than economic growth.
Since then, however, optimism has faded, although Boehner on Monday offered up a counter to the president’s initial proposal. It’s incremental progress to be sure, which is not unexpected for negotiations, but still no one can rule out the possibility that we’ll end up going over the cliff. While it’s hard to calculate the consequences of failure, they could turn out to be grave.
It’s irresponsible for anyone to gamble with our country’s future. We need real leadership, and we need it now.
Here’s what we know about the fiscal-cliff negotiations:
The House speaker has no arrows in his quiver in the fiscal-cliff talks—his caucus will revolt if he caves. That’s the consensus among Washington Republicans, says Rich Galen, who warns a cliff jump is likely.
There is a growing sense among Republican policy wonks and senior lobbyists that the chances of getting any kind of meaningful deal on the deficit between now and the end of the year are drifting toward zero.
Speaker of the House John Boehner (R-Ohio) after private discussions with Treasury Secretary Timothy Geithner on the fiscal-cliff negotiations in Washington on Nov. 29, 2012. "No substantive progress has been made between the White House and the House" in the past two weeks, Boehner said. The “fiscal cliff” is a combination of tax increases and spending cuts worth about $670 billion that will take effect at the start of next year unless Congress and the White House agree to postpone or replace them. (J. Scott Applewhite / AP Photo)
The two basic problems, they say: House Speaker John Boehner doesn’t have any arrows in his quiver, and President Obama’s negotiating skills are limited to his caving in or refusing to budge. No middle ground.
“The debt limit is the only leverage we have, and we can’t use it before Christmas,” says a former senior Republican House member. The Congressional Budget Office has estimated the United States will hit the debt ceiling in mid-February. “There is no reason for the president to bargain prior to getting to the fiscal cliff,” the former House member says. “He wants to go over the cliff and then blame Republicans for raising taxes on everyone.”
A former senior staff member of the House Ways and Means Committee says of Boehner: “He can’t cave or the conference will revolt.” The best Boehner can hope for in 2012 is to extend the Bush tax cuts for those below $250,000, cap the highest bracket at something below 39 percent (he has said the top rate will rise to 43.4 percent), and make up the difference in the way itemized deductions are handled.
The consensus around K Street is that renewing the AMT (alternative minimum tax) and what is known as the “doc fix”—Medicare payments to physicians—as well as many of the business extenders, is the best anyone can reasonably hope to accomplish.
Some feel that Treasury Secretary Timothy Geithner will order withholding rates on those below $250,000 to remain the same. Then the vast number of income taxpayers would see no change in their taxes while the Congress and the president hash out a solution after the new Congress is seated on Jan. 3, 2013. “The theory is Geithner will take the chance that the Bush tax cuts will be renewed for those earning less than $250,000 and there will be no need for retroactivity,” the former staff member says.
That, however, would rob the president of a major bargaining chip: the expected fury of working Americans at the Republicans in the House for having raised their taxes.
Obama took his case to Twitter, the GOP made a counteroffer, and a right-wing think tank elbowed its way into the debate. Yet still no progress! Are we screwed? By Daniel Gross.
It’s Day 27 of the fiscal cliff hostage situation. Republicans made a counteroffer to the president’s intentionally offensive opening gambit, outlining $600 billion in cuts to entitlements and spending and $800 billion in revenues—to be raised without raising tax rates.
U.S. President Barack Obama speaks at The Rodon Group manufacturing facility on November 30, 2012 in Hatfield, Pennsylvania. Obama made a case for action on "fiscal cliff" legislation and urged congress to work together for a solution. (Jessica Kourkounis / Getty Images)
The president responded by doing what so many bored people in D.C. do to while their way through the long hours of the workday afternoon: he took to Twitter. The irony? The president’s mid-day announcement that he would take fiscal cliff questions at 2 p.m., using the hashtag #my2k, was only the third most interesting thing to happen Twitter that day. First, the pope signed on, choosing as his handle @pontifex Then, news broke that Kate Middleton was pregnant with what may be a British monarch 60 years hence.
With only 28 days left until a perfect storm of tax increases and spending cuts hits the economy, why is the President spending his afternoon on Twitter? Any deal to avert the fiscal cliff will be an inside job. If it happens, it will have to come down to a deal made between Obama and House Speaker John Boehner. But the two of them aren’t meeting regularly. And so the president has taken to playing an outside game. Last Friday, he took a campaign-style trip to Pennsylvania to discuss taxes. On Sunday, he dispatched Treasury Secretary Tim Geithner to the talk shows to speak aggressively. The White House is trying to push the country into pressuring Republicans to compromise—or to soften public opinion in the event that we do, in fact, go over the cliff.
The Twitter press conference was essentially partisan warfare by other means. Before it started, House Majority leader Eric Cantor played his usual role of being a non-constructive jerk: “Mr. President, time to get serious. Let’s protect small businesses and families from a harmful increase in tax rates and cut spending,” he tweeted from his handle, @GOPLeader. Note that Cantor’s tweet was not, in fact, a question. It was a statement. And it highlighted the general Republican modus operandi throughout these budget talks: don’t show any sign of actual engagement, just grandstand and repeat talking points.
For much of 2012, the institutional right believed it could overwhelm the president’s popularity and incumbency through the relentless application of third-party money. That didn’t work out too well for the Romney campaign. But they haven’t given up. The Heritage Foundation, the right-wing think tank, earlier in the day deployed some of its donors’ capital to buy up the designated #my2K hashtag so that it could use it to promote its own tweets. And so when people logged on, the top of their feed would contain tweets like this one, from @Heritage:
The Twitter conference started a few minutes late:
Can the president’s Twitter followers strengthen his hand on the fiscal cliff? Howard Kurtz on whether Obama for America’s social media prowess can fire up the grassroots with the presidential campaign won.
It was a startling moment, but almost no one realized that a sea change had occurred.
The president of the United States was urging the great American public to rise up and demand change through social media.
U.S. President Barack Obama speaks at The Rodon Group manufacturing facility on November 30, 2012 in Hatfield, Pennsylvania. Obama made a case for action on "fiscal cliff" legislation and urged congress to work together for a solution. (Jessica Kourkounis / Getty Images)
Urging voters to pressure Congress to accept his financial plan, Obama said last week: “I want you to call, I want you to send an email, I want you to post on their Facebook wall. If you tweet then use a hashtag we’re calling #My2K. Not Y2K. My2K. because it’s about your 2K in your pocket. We’re trying to burn that into people’s mind here.”
Heading for the fiscal cliff? No problem. Just start tweeting! In fact, the president himself is answering questions on Twitter at 2 p.m. on Monday, to make the case in 140-character bursts.
Twitter can indeed be a potent weapon. And the fact that the White House is now trafficking in hashtags shows how technology has changed the art of persuasion.
The hashtag, a way of searching Twitter for like-minded posts, is the new bumper sticker. My2K invokes the White House argument that the average middle-class family will pay $2,200 more in taxes if Congress fails to act by year’s end and the country slides off the fiscal cliff.
In an effort to personalize the eye-glazing numbers of a budget fight, the White House has been retweeting messages from people who’d be affected by the tax hike. “Laura McAfee: that’s 2 months rent and that’s huge to me, as a single mom.” “Denise: We would be able to pay 2/3 of ONE semester of community college for our daughter.”
Over tax hike debate.
Well this is comforting. The White House and Republican leaders are butting heads over taxing the wealthy as they struggle to forge an agreement that will avoid the U.S. tumbling over the “fiscal cliff.” Both sides point the blame at each other for the current stalemate that focuses on how to raise taxes on the rich. “There’s no path to an agreement that does not involve Republicans acknowledging that rates have to go up on the wealthiest Americans,” Treasury Secretary Timothy Geithner said on Meet the Press. House Speaker John A. Boehner was decidedly pessimistic. “Right now, I would say we’re nowhere, period. We’re nowhere,” he told Fox News Sunday. C’mon guys.
It’s Day 26 of the fiscal-cliff hostage situation, and it’s clear that GOP negotiators have lost touch with reality. Daniel Gross on their astounding lack of a counteroffer to the Dems.
Adrenaline-filled, aggressive combatants paraded around on national television and started trash-talking, aiming to intimidate their opponents and get inside their heads. Oh, and the National Football League also played some games.
(L) Win McNamee / Getty Images (R) J. Scott Applewhite / AP Photo
Sunday, Dec. 2, was Day 26 of the fiscal cliff hostage situation. And the Democrats, who gained an immense advantage in the negotiations over future tax rates by virtue of their victories in the election, seem, finally, to be developing some swagger. Their tone toward the Republicans has become somewhat patronizing. First, there was President Obama’s mid-week invitation of Mitt Romney to lunch at the White House, which was simultaneously magnanimous and a pretty naked power move. Romney couldn’t refuse to come without looking like an extremely sore loser. The single photo released, which quickly went viral, showed Obama giving Romney the kind of good-try handshake that coaches deliver to their opponents after a thorough spanking.
In the past, the modus operandi from the White House on tax and spending issues was a tone poem of tortured frustration, self-criticism, and bargaining. They’d make a middle-of-the-road proposal and then very quickly move off it, failing to appease Republicans and demoralizing the base. But this time is different. Now, the Republicans are compromising and demoralizing their base. The Obama White House is largely standing back and watching with glee as congressmen line up to abandon Grover Norquist’s no-tax pledge. (My personal favorite is Rep. Chris Gibson of New York, who said his pledge doesn’t count anymore because, thanks to redrawing of the map, he now represents a different district.) Republicans have generally conceded that a deal will have to include more revenue, but insist now that new revenue arises solely from closing loopholes and capping deductions.
The Democrats are essentially pocketing the Republicans’ capitulation on revenue and asking for much more—they’ve adopted the old GOP strategy of simply repeating their desires as a method of bargaining. The first proposal, which Obama offered late last week, asked for lots of tax increases, plus some stimulus measures, and offered close to nothing on entitlements. Its chief plank was for marginal rates on high incomes to rise. And this time, the Democrats are confident that the Republicans’ cave on revenue is just the beginning. “I don’t think Republicans are willing to shut down the government over 2 percent of the country,” said top economic aide Jason Furman at an on-the-record briefing last week.
The psychological warfare can also be seen in the patronizing tone Democratic officials are now taking toward the Republicans. The Republican leaders, who used to throw terror into Democrats, are now objects of pity. There was Sen. Claire McCaskill, fresh after dispatching Tea Party loon Todd Akin, on Meet the Press. “I feel almost sorry for John Boehner,” McCaskill said. “There is incredible pressure on him from a base of his party that is unreasonable about this. And he’s gotta decide, is his speakership more important, or is the country more important.”
Treasury Secretary Tim Geithner took to the Sunday talk shows, too. For the last several years, Geithner has occupied perhaps the most unenviable position in Washington. He’s been like a quarterback operating behind an offensive lined composed solely of rookies. Time after time, he’s been blitzed—from the right and the left—on the bailouts, aid to the auto industry, and slow movement on mortgage aid. But on Sunday he was the one expressing empathy for poor John Boehner. “They’re in kind of a tough position now,” Geithner said on Fox News Sunday. “They’re trying to figure out how to find a way to support things that they know they’re gonna have to do. That’s going to be hard for them.” (Note: the very willingness of Geithner to appear on a Fox program is a sign of the administration’s newfound confidence.) Geithner pounded home the Obama administration’s talking point: we’ve put forward our plan. If the Republicans don’t like it, they should put forward their own.
In response, the Republicans countered with an offense that resembled that of the feckless Arizona Cardinals on Sunday. The passes were all over the map and failed to connect. Some key players were fatalistic. Sen. Lindsey Graham and Boehner both conceded that we may well go over the cliff. Others denied they had a role to play. Appearing on ABC’s This Week, Rep. Tom Cole said, “I don’t think we need to put a formal proposal out on the table.” Dan Senor, a Romney foreign policy adviser, proclaimed that Obama’s proposal, the one that caused Mitch McConnell to laugh out loud, and that “flabbergasted” Boehner, was too far to the left.
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