Fiscal Cliff

What are we talking about here? Right now we’re at $86 TRILLION and counting. This $16 trillion national debt they talk about? That’s chump change compared to what we REALLY owe. .. . These phonies – from both sides of the aisle – in Washington are going through this dog and pony show over our deficit and debt … but you won’t hear them say squat about the real problem … the $86 trillion PLUS our children and grandchildren are going to have to pay.

Perhaps we will get lucky and enough republicans senators will break ranks with McConnell and enough democrat senators will back cuts as well as tax hikes.

Fortunately, there is a way Republicans can escape falling into the trap: Publicly accept President Obama’s proposals in full, subject to the following conditions: First, there must be no staff midnight sessions drafting last-minute hidden hooks. Second, there must be no floor amendments by either party, simply an up or down vote on the deal. Third, the president must stand before the TV cameras and state that his party owns all of it, flanked by House and Senate Democratic leaders who say the same. Fourth, GOP House and Senate leaders declare that (a) as Obama won the election, but (b) the GOP opposes tax rate increases as bad economics, the GOP will step aside, without endorsing the package.

If the deal works well, Democrats will get, and deserve credit. If the deal works badly, Democrats may be blamed—though they might not, if voters continue to be as forgiving as they were in re-electing the president.

Procedurally, Republicans would vote against in the Senate, where the Democrats have the majority and thus can pass the bill without a single Republican vote, as happened with Obamacare. In the House, about 30 Republican members in GOP-safe districts can skip the session, and thus allow the Democrats to pass the bill with only their own party’s votes; the remainder of GOP members would vote against the deal.

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By denying Democrats political cover, Republicans would restore the principle of accountability for policies adopted. Accountability only can be fixed if bargains and party positions are transparent enough for the voting public to see. If Republicans negotiate a deal, they will co-own it, and thus be unable to credibly criticize a bad result. Also, they will have sacrificed bedrock principles that underlie their vision of how to fix things. That will bode ill for future elections.

It is possible—even likely–that the Democrats will “game” the bargain with staff mischief, but they will do that anyway with a compromise deal. Only if there is a failure for which Democrats are blamed can Republicans reasonably expect to regain the White House and the Senate. A deal that offers the GOP crumbs and is really Obama’s plan slightly modified has no better prospect to succeed than Obama’s proposal standing alone. And the Obama plan will not succeed, unless the laws of economics have been repealed, or the vast latent motive power of the American economy, against forbidding odds, triumphs over bad policies.

A deal with a president in the driver’s seat amounts to a bungee-jump for the GOP, using a frayed political rope as lifeline. At best there is the momentary thrill of jumping off by striking a deal; but if as likely the rope breaks the GOP will feel the political pain, not the president or his party.

In sum, let the Republicans play political judo—applying one’s own leverage against an opponent’s weight and momentum, to defeat the Democratic attempt to force the GOP to compromise its core economic principles and thus insulate Democrats from accountability for their misguided economic policies.Much more and interesting comments

Republicans have got to make Obama own the economy.

They should spend from now until the end of the congressional calendar reading aloud from Thomas Sowell, Richard Epstein, John Lott and Milton Friedman and explaining why Obama’s high tax, massive regulation agenda spells doom for the nation.

Then some Republicans can say: We think this is a bad idea, but Obama won the election and the media are poised to blame us for whatever happens next, so let’s give his plan a whirl and see how the country likes it.

Republicans need to get absolute, 100 percent intellectual clarity on who bears responsibility for the next big recession. It is more important to win back the Senate in two years than it is to save the Democrats from their own idiotic tax plan. Unless Republicans give them an out, Democrats won’t be able to hide from what they’ve done.

Even Democrats might back away from that deal.



Read more: http://dailycaller.com/2012/11/28/make-the-democrats-own-the-obama-economy/#ixzz2DdQCkh9K

With negotiations over how to avoid going over the “fiscal cliff” intensifying, there’s a lot of attention on Grover Norquist and his “Taxpayer Protection Pledge,” in which lawmakers who sign it pledge to taxpayers that they will (a) oppose any and all efforts to increase the marginal income tax rates for individuals and/or businesses; and (b) oppose any net reduction or elimination of deductions and credits, unless matched dollar for dollar by further reducing tax rates.

On the pledge, I have several thoughts.

1. Mr. Norquist has basically been a force for good, since he raises the price of tax increases and allows Republicans to get more in return for them. That said, I have never liked the idea of politicians signing pledges beyond their oath to support and defend the Constitution. It locks a person into a position that may seem reasonable at the time but eventually becomes unwise. I support lower tax rates, but they are not a talisman. And whether or not one should agree to higher taxes depends on what one is able to get in return.

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2. I’m sympathetic to the qualities we should look for in a representative and which Edmund Burke referred to in his speech to the electors of Bristol: ... What Burke is arguing for, I think, is a certain independence of judgment and prudence in politicians.

It seems to me that pledges run somewhat counter to both. Politicians should offer their vision and agenda and ask for the public’s trust to carry those things out in a reasonable, if imperfect, way. If they fail, voters have a recourse, which is called an election.

3. What about Members of the House and Senate who signed a pledge not to raise taxes but have now changed their mind? ...

My own view is that one should take public officials in the totality of their acts and that reneging on an unwise commitment isn’t by itself disqualifying. ...

I happen to believe that in our present circumstances, tangible steps toward structurally reforming entitlements are a higher priority than not increasing revenues. I wouldn’t be inclined to do the latter without getting firm guarantees on the former; and even then, it would be less than ideal. But we ought to make the most of our actual situation and not refuse to do a proper thing, because there is something else more proper, which we are not able to do.
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My own view is that one should take public officials in the totality of their acts and that reneging on an unwise commitment isn’t by itself disqualifying.

It's all a game.

As they face down the fiscal cliff, a growing number of Republicans are abandoning the pledge not to increase taxes that they made to anti-tax crusader Grover Norquist. Today, Hudson Valley Rep. Chris Gibson came up with what might be the most creative excuse yet for breaking the pledge. Mr. Gibson saw his district number change from 19 to 20 during this year’s redistricting process and he reasoned that the pledge no longer applies to him as it was only to the constituents under the previous district number.

“The Congressman signed the pledge as a candidate in 2010 for the 20th Congressional District,” his spokeswoman explained. “Regarding the pledge moving forward, Congressman Gibson doesn’t plan to re-sign it for the 19th Congressional District, which he now represents (the pledge is to your constituents of a numbered district).”

Indeed, the pledge itself is indeed addressed “to the taxpayers of the _____ district,” with the candidates filling in the blank. However, the next line of the pledge says “and to the American people,” which calls Mr. Gibson’s logic into question.

Nevertheless, Mr. Gibson apparently feels the change in his district number is a sufficient excuse for him to “consider all comprehensive packages brought forward as a result of bipartisan negotiations” in the latest high-profile budget negotiations currently controlling the conversation in Washington. He joins a slew of Republicans who have dropped the pledge, including Long Island Rep. Peter King who entered a heated war of words with Mr. Norquist over the issue. Prior to the recent raft of pledge-breakers, all but six of the current Republican members of the House of Representatives had signed the pledge.sheesh

The fiscal cliff is confusing, even to the Washington legislators arguing about it. On the one hand, the cliff consists of rapid deficit-reducing tax increases and spending cuts. On the other hand, the people most adamant about the need to avoid the cliff are calling for deficit reduction. I listened to No. 2 Senate Democrat Dick Durbin give a fiscal-cliff speech on Tuesday framed around the idea that “deficit reduction is a progressive cause.” The main anti-cliff group is even named Fix the Debt.
Congress has structured the rules so that only an agreement on long-term deficit reduction—a grand bargain—can prevent the growth-killing, short-term deficit reduction of the fiscal cliff. But that’s no coincidence. Proponents of the grand bargain to resolve long-term fiscal questions don’t favor a bargain because they want to avoid the fiscal cliff. They deliberately created the fiscal cliff in hopes that the emergency would set the stage for a grand bargain. It’s a strategy they hit upon only after their previous hope that the 2011 debt-ceiling crisis would force a bargain proved futile.
The problem is that the quest for the grand bargain is essentially a quest for the impossible. Whereas ginning up crises to force Congress to strike that impossible bargain is wreaking real tangible harm on the country. Whatever happens during the lame-duck session, the best thing for America would be for the great and the good in Washington and corporate America to drop their fixation with the grand bargain.

The grand bargain is impossible because it’s not possible for today’s Congress to bind the hands of future congresses. In 1997, for example, President Bill Clinton and House Republicans struck a grand compromise that reduced capital gains rates and expanded health care for children. By 2003, the budget framework of 1997 was completely obsolete, thanks to two rounds of Bush tax cuts and two new wars. The deal between Clinton and Newt Gingrich didn’t bind new leaders and didn’t foresee new circumstances. Nothing members of Congress agree to in 2012 or 2013 is going to change the fact that the 2019 budget deficit will be determined by the will of the politicians in office at that time and the situation they face.
And the current situation is that weak demand is giving us low and stable inflation plus low interest rates. This is not a problem that deficit reduction could solve. The sensible policy solution is to focus on the illness we have right now, and let decisions about long-term tax hikes and spending cuts be made later, when the patient is healthy.
When financial markets do eventually demand deficit reduction, they’ll want to see immediate tax hikes and spending rollbacks. That’s what happened repeatedly during the later Reagan years, in the big 1990 and 1993 budget deals, and in the eurozone periphery. It will be unpleasant when it happens, but it hasn’t happened yet, because the markets recognize that stabilizing the economy is more important. Simply promising that future congresses will do things differently impresses nobody. The various spending caps in the Simpson-Bowles plan no more prevent future spending than the 1997 budget deal prevented the Bush tax cuts, the post-9/11 hike in military spending, or the outlays associated with No Child Left Behind or the Medicare prescription drug benefit.
The only grand bargain that would work would be an abolition of democracy. How much the government should spend, and on what, and where the money should come from is the essence of politics. Corporate leaders’ hazy desire for long-term “certainty” is understandable to a point, but it’s completely impractical.

During the Bush years, the grand-bargain crowd was an amusing curiosity. But in the Obama years they’ve become actively dangerous. In part this is the result of Pete Peterson’s lavish funding of grand bargaineering crowding other, more solvable issues off the table. Even more insidious is the crisis-mongering. In the early days of the Obama administration, I heard some officials muse that sooner or later a bond market crisis would arise that would force Republicans to the table on taxes. More recently, I’ve heard of Wall Street types lamenting the absence of a bond-market crisis that would force Democrats to cut entitlements. This is the mentality that led the White House to initially welcome the 2011 debt-ceiling standoff as a useful trigger for a grand bargain. Instead, all it brought us is the fiscal cliff. The repeated crises are a dangerous game that discourages investment, thus leaving the country less prepared to meet the demands of an aging population. And all for an essentially worthless promise to reduce deficits in the future.
This cliff will probably be avoided, but whatever happens, it’s time to stop grand bargain fantasizing and start focusing on present-day problems.

By 2003, the budget framework of 1997 was completely obsolete, thanks to two rounds of Bush tax cuts and two new wars. The deal between Clinton and Newt Gingrich didn’t bind new leaders and didn’t foresee new circumstances. Nothing members of Congress agree to in 2012 or 2013 is going to change the fact that the 2019 budget deficit will be determined by the will of the politicians in office at that time and the situation they face.

bottom line: for far too many in Washington the Washington power games take priority over the best interests of the nation.