Here Comes the Cliff
Last week, Republicans proved they are not a governing party. Next week we will see whether Democrats are. A governing party would have, reluctantly, passed Speaker John Boehner’s Plan B, which would have preserved the current tax rates on everyone with incomes under $1 million. Passage would have put Senate Democrats on the spot, since they voted for a similar measure in 2010. They might have engaged in negotiations with Boehner that could have been more productive than his negotiations with Barack Obama this month and in the summer of 2011. Then, as Bob Woodward reports in his book “The Price of Power,” Boehner and Senate Majority Leader Harry Reid fashioned an agreement after Obama had broken off his grand bargain talks with Boehner by increasing his demands.
Last week, Republicans proved they are not a governing party. Next week we will see whether Democrats are.
A governing party would have, reluctantly, passed Speaker John Boehner’s Plan B, which would have preserved the current tax rates on everyone with incomes under $1 million.
Passage would have put Senate Democrats on the spot, since they voted for a similar measure in 2010. They might have engaged in negotiations with Boehner that could have been more productive than his negotiations with Barack Obama this month and in the summer of 2011.
Then, as Bob Woodward reports in his book “The Price of Power,” Boehner and Senate Majority Leader Harry Reid fashioned an agreement after Obama had broken off his grand bargain talks with Boehner by increasing his demands.
But Boehner could not get enough Republicans to vote for Plan B to pass it in the face of united Democratic opposition. He could have afforded to lose 23 Republicans and still prevail.
He must have been well short of that goal. House leaders usually take measures to the floor on which they’re short only a few votes and squeeze out the last votes there. It’s not a pretty process – House Republicans held the roll call open for three hours to pass the Medicare prescription drug bill in 2003 – but it’s one way laws get made.
Some may wonder why we are in a situation in which tax rates will automatically rise if Congress doesn’t act. Why do current tax rates expire?
The reason is that George W. Bush and congressional leaders made a gamble when they cut taxes in 2001 and 2003. They could probably have gotten 60 votes in the Senate for a smaller package of tax cuts.
Instead, they decided to go big and pass them under budget rules requiring only 50 votes but which also required that the rates would expire after 10 years. The economy was weak back then, and you could argue that the stimulative effect of the cuts before and after the 2008 crash was worth the gamble.
And you can note that the tax cut policy has endured for some considerable time. It survived the Democrats’ capture of both houses of Congress in 2006 and the presidency in 2008.
It survived the period from July 2009 to January 2010, when Democrats had a supermajority in the Senate and probably had the votes to raise tax rates. And it survived two more years when, after Republicans’ capture of the House in November 2010, Obama felt obliged to continue the tax rates a month later.
Obama’s re-election meant that they couldn’t survive any longer. Public policy is not eternal; it can always be changed. Bill Clinton’s tax increases of 1993 lasted only eight years. George W. Bush’s tax cuts have lasted longer.
Now the question of whether we avoid the fiscal cliff – tax rate increases, sequestration, the full imposition of the Alternative Minimum Tax – is up to the Democrats. Specifically, the Senate Democrats.
Boehner’s rollout of Plan B last Monday reflected his judgment that negotiation with Obama was futile and that the only way forward was through regular order in Congress.
“The House has already passed legislation to stop all of the Jan. 1 tax rate increases and replace the sequester with responsible spending cuts that will begin to address our nation’s crippling debt,” he said in his terse statement after pulling Plan B off the floor of the House. “The Senate must now act.”
You can see this as an attempt to influence public opinion. Current polling shows that voters say they will blame Republicans more than Democrats if we go over the fiscal cliff.
But people are not always good predictors of their future opinions. The failure of the grand bargain negotiations in summer 2011 was followed by downturns in opinion toward both Obama and Republicans.
Senate Democrats have been avoiding tough votes on fiscal issues for some time. They haven’t passed a budget resolution for three years, though the budget act requires them to do so.
That likely reflects a reluctance to make their policies clear to the public and, perhaps, differences in their caucus making it as hard for them to muster a majority as it was for Boehner Thursday night.
Are we going over the cliff? Looks like it to me.
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