Today’s Courier Herald Column:
Republicans seem to be negotiating with themselves in Washington these days, as the realization has set in that regardless of the outcome of these “fiscal cliff” negotiations, they’re likely to come out on the losing end. Democrats, for their part, seem content to blow off any Republican offers with a guffaw and ask Republicans to try again.
Republicans have boxed themselves into a corner, and any way out of it causes them problems. Democrats are insisting on not just additional revenues to the Treasury which Republicans have offered from limiting deductions. They are now insisting that rates must increase on high income individuals. In short, the President’s position is that Republicans must break any pledges they’ve made to not increase taxes as part of any deal.
If Republicans decide not to do this, however, they risk blame for the taxes of all Americans going up. The Washington Post released a poll in conjunction with Pew Research showing 53% of Americans will blame Republicans if a deal is not done, versus just 27% saying the President is the problem. That’s a divide of public opinion significantly larger than usual party splits, and Republicans are acting like they are feeling the heat.
That said, Republicans have totally lost the message that ultimately controls public opinion. These are, after all, still referred to as the “Bush tax cuts”, despite the fact that President Obama has renewed them a couple of times already. More importantly, the “Bush tax cuts” are an entire package of tax cuts, but to hear most talk about them you would think the only part President Bush pushed for was the reduction of rates on the high income earners.
If these “temporary” tax cuts were allowed to expire, there is an entire range of taxes that would be affected. Every American who pays income taxes would pay a higher burden. Millions would be added back to the tax rolls that were eliminated from paying income taxes because of these tax cuts.
And yet, despite lowering taxes for all American taxpayers and eliminating income taxes for over ten million Americans altogether, the Republicans are spending most of their messaging on preserving the tax cut for a small few rather than taking the credit for taxes being lower for all.
Republicans have further handicapped themselves by agreeing to this fiscal cliff in the first place, and by setting sequestration as part of a poison pill solution that was supposed to bring everyone to the table. They are now faced with the unenviable position of either making a deal on the Democrats’ terms, or watching defense spending be gutted while taxes go up on everyone. And, frankly, it is a problem of Republicans own making.
Politically, it is difficult to see how Republicans win this battle. They are likely to either turn off independents and moderates by holding firm against all tax rate increases and let some portion of sequestration and across the board tax increases happen. Or, they may decide it’s politically palpable to renew the Bush tax cuts for most Americans and pledge to fight the good fight on reducing rates later.
A new debt ceiling increase must be voted on soon, likely within the next 90 days. Republicans appear to be coalescing around the idea that they will have more leverage on that vote, as Democrats don’t fear raising taxes on everyone nor slashing defense spending. Republicans meanwhile have enough of their rank and file that don’t want to increase the debt ceiling that they believe Democrats will be less willing to play chicken when approaching that vote.
The result of this continued dance appears to be more kick-the-can politics. Artificial deadlines continue to be created, politicians appear to be heavily engaged, and at the end, they determine they need more time and create another artificial deadline.
Republicans will never win this battle, as they need to eventually realize they are playing on the other guys’ turf. Instead, Republicans need to get this behind them and begin expressing a transformative vision for 2014 and 2016. If we’re for fundamental tax reform, we need to begin articulating what that will look like rather than bickering over marginal rates that affect a relative few. If we’re for entitlement reform, we need to articulate why small pains today mean a healthier plan for tomorrow.
Most of all, if we’re for economic growth we need to articulate the need for “certainty” in our economy, tax policy, and government regulation. Kicking the can – again – doesn’t project that. And our economy suffers for it.