Obama ducked when his moment arrived
E. Thomas McClanahanWell, isn’t this another fine mess? We’ve gotten to the point that hard-liners on both sides are starting to say, “Jump!” — let the “fiscal cliff” happen. You wonder what they’re thinking.
Here’s a guess. People on the left are thinking finally, an end to the hated Bush tax cuts. They forget the Bush tax cuts weren’t “tax cuts for the rich.” They were tax cuts for everyone. Everyone, low-income families on up, would take a hit.
Hardliners on the right are thinking, finally some real spending cuts, because a big part of the fiscal cliff deal is across-the-board spending cuts.
Medicare payments to doctors would drop. A big chunk of emergency jobless benefits would vanish. The Pentagon would be hit especially hard, undermining national security.
Cliff jumpers in both parties aren’t thinking clearly, at least by my lights.
Maybe the assumption is that if we go over the cliff, the same players who can’t come to agreement now will quickly fix things. Not likely. You’ll get no argument from this corner that solving our fiscal problems will require more revenue and serious spending cuts, but the sudden shock of smaller paychecks for millions and a dropoff in federal spending would probably jolt the economy back into recession.
After five years of what this country has been through, that would be demoralizing in the extreme. Former Federal Reserve Vice Chairman Alan Blinder pointed out in The Wall Street Journal that in a typical recession the jobless rate rises by about 3 percentage points.
So based on where we are now, you’re looking at around 11 percent unemployment and everything that goes with it — headlines screaming about mass layoffs, falling consumption, shrinking college and retirement funds, and companies on the edge thrown into insolvency.
I wonder whether President Barack Obama ever thinks back a couple of years, when the Simpson-Bowles commission issued its report. This was the plan that, amazingly, drew buy-in from key liberals and conservatives in Congress. The concept was the same as the 1986 tax reform — broaden the base and lower the rates — but unlike ’86, it would not have been revenue-neutral. It would have produced more money for the Treasury, which is essential.
Yet you had deficit hawks and liberals alike signing on. No, it wasn’t perfect, and it would not have been easy to decide how to close the loopholes needed to bring the top rates down. But here was a chance. People on both sides were signaling they were willing to try. All they needed was a big push from the president.
You’d have more revenue to lower the deficit, lower marginal rates to encourage more growth and entrepreneurship and an end to much of the maddening uncertainty that has dogged the economy for so long. All that money bottled up in corporate coffers? A lot of it would have flowed out as investment in new endeavors, adding more jobs.
This was Obama’s moment, his opportunity to do something big and bipartisan. Perhaps if he’d grabbed it then we wouldn’t be in the spot we’re in today. After all, the current fiscal-cliff melodrama grew from the debt-ceiling fiasco of last year, which occurred when it did because of Washington’s failure to grapple earlier with the exploding deficits.
But apparently Obama couldn’t buy the “lower the rates” part of Bowles-Simpson because he’s obsessed with raising the top rates. I spent last week reading articles by people trying to figure this out because it doesn’t make much sense given that many of the people he wants to whack — the “rich” — don’t have any ordinary income to be taxed at the higher rates. They live off their capital.
Never mind, Obama wants higher rates and he’ll get them. Republicans know they have a weak hand and they know that if we go over the cliff it will become weaker. The Democrats will push to restore the Bush tax cuts for everyone but the top 2 percent. And if Republicans balk, they’d be seen as denying tax cuts for 98 percent to protect the top 2.
Which is why many Republicans are talking about caving on higher rates and fighting for serious entitlement reform, or caving now and fighting over spending in the next debt-ceiling crisis, due early next year. It’s worth considering that the fiscal picture might be a lot healthier today had Obama recognized his moment — his historic opportunity — when he saw it.
To reach E. Thomas McClanahan, call (816) 234-4480 or send email to mcclanahan@kcstar.com.
George Hunsucker
Northland
5 months, 1 week agoZero is a class warfare warrior and his minions merely want to screw the rich, which we all know have the means to avoid being screwed.
S/B offered America a roadmap back and zero being the NON-LEADER he is was too damm stupid and partisan to take the trip.
I am one in the camp of two approaches being acceptable to me. First, let the cliff happen and then hope that in 2014 Americans will repeat 2010 and conservatives expand margins in both H&S so zero has to become nonpartisan to avoid destroying the D party.
Secondly, merely say to D’s OK, do what you want and we conservatives will not oppose it. Then, the same result I would hope happens in 2014 because the economy will be in the crapper due to higher taxes and the full effects of zerocare. This is as I understand it, Ron Paul’s approach.
Either way, the eoconomy IMO is heading for another recession due to the class warfare being fought by the left…..
Sam Woods
5 months, 1 week agoHey George, know who torpedoed Simpson-Bowles? Three republicans lead by Paul Ryan. There was no way Obama was going to get Simpson-Bowles. Republicans were going to oppose whatever Obama wanted. No. Matter. What. You know what else? Obama got what he wanted in the debt ceiling deal. The deal was considered a “major victory” for republicans at the time.
Whining by republicans now seems extra small. Talk about too stupid and partisan.
Phil Cardarella
5 months, 1 week agoObama is in a win-win situation.
Either the GOP will agree to end the tax break on the upper 2% or not. If ALL the tax breaks end for everyone? Hey, the government gets enough money to function — and the GOP gets the blame if the House doesnt fix it.
This is NOT “class warfare”. It is a SMALL tax increse. Class warfare is returning the rates to the Eisenhower years — adjusted for inflation. Or, class warfare is sending all those Wall Street Bonus Babies who made out like thieves while destroying the world economy to the federal prisons they deserve for the frauds they committed — or groups of patriotic citizens dragging them from their $200 lunches and replacing their Armani suits with those made of tar and feathers.
Phil Cardarella
5 months, 1 week agoOh, FYI?
Massive wealth is inherently dangerous to our democracy. Even if trickle-down worked for the economy, the disproportionate power created by great wealth is inherently bad.
For every Buffett or Gates, there are too many Kochs intent on using their money as a bludgeon to get their way on public policy by simply buying or threatening politicians. A nutty idea in the mind of a guy pushing a misappropriated grocery cart is relatively harmless. Give him a billion dollars and an army of sycophants and he is dangerous to the Republic.
George Hunsucker
Northland
5 months, 1 week agoYou are sounding more and more like a little jealous lib phillie….
JR Beillenhouser
5 months, 1 week agoPhil sure likes to talk about the Kochs but gives Soros a free ride. Soros have given more than anyone, and he is more dangerous.