November 9, 2012

Word: Don't let the GOP push us off the cliff

Paul Krugman, NY Times - President Obama has to make a decision, almost immediately, about how to deal with continuing Republican obstruction. How far should he go in accommodating the G.O.P.’s demands?

My answer is, not far at all. Mr. Obama should hang tough, declaring himself willing, if necessary, to hold his ground even at the cost of letting his opponents inflict damage on a still-shaky economy. And this is definitely no time to negotiate a “grand bargain” on the budget that snatches defeat from the jaws of victory.

In saying this, I don’t mean to minimize the very real economic dangers posed by the so-called fiscal cliff that is looming at the end of this year if the two parties can’t reach a deal. Both the Bush-era tax cuts and the Obama administration’s payroll tax cut are set to expire, even as automatic spending cuts in defense and elsewhere kick in thanks to the deal struck after the 2011 confrontation over the debt ceiling. And the looming combination of tax increases and spending cuts looks easily large enough to push America back into recession.

Nobody wants to see that happen. Yet it may happen all the same, and Mr. Obama has to be willing to let it happen if necessary.

Why? Because Republicans are trying, for the third time since he took office, to use economic blackmail to achieve a goal they lack the votes to achieve through the normal legislative process. In particular, they want to extend the Bush tax cuts for the wealthy, even though the nation can’t afford to make those tax cuts permanent and the public believes that taxes on the rich should go up — and they’re threatening to block any deal on anything else unless they get their way. So they are, in effect, threatening to tank the economy unless their demands are met.

Mr. Obama essentially surrendered in the face of similar tactics at the end of 2010, extending low taxes on the rich for two more years. He made significant concessions again in 2011, when Republicans threatened to create financial chaos by refusing to raise the debt ceiling. And the current potential crisis is the legacy of those past concessions.

Well, this has to stop — unless we want hostage-taking, the threat of making the nation ungovernable, to become a standard part of our political process.

So what should he do? Just say no, and go over the cliff if necessary.

It’s worth pointing out that the fiscal cliff isn’t really a cliff. It’s not like the debt-ceiling confrontation, where terrible things might well have happened right away if the deadline had been missed. This time, nothing very bad will happen to the economy if agreement isn’t reached until a few weeks or even a few months into 2013. So there’s time to bargain.

More important, however, is the point that a stalemate would hurt Republican backers, corporate donors in particular, every bit as much as it hurt the rest of the country. As the risk of severe economic damage grew, Republicans would face intense pressure to cut a deal after all.

4 comments:

mike flugennock said...

Obama, hang tough? Pardon me while I laugh until I piss myself.

Pretty well nigh impossible, considering Obama's actively colluding with the GOP.

"One-Night Stand", indeed.

Anonymous said...

Restoring such minimal taxes on the rich is essential to governance. No tax raise on the rich, the nation goes over the cliff.

greg gerritt said...

Going over the cliff may be the ONLY way we cut military spending. I am ready for a little cliff jumping.

Frank Munley said...

I'd say the chances are better than even that Obama will insist on not renewing the Bush tax cuts on the rich, but I think he would have a better chance going along with Tim Kaine's cut-off of $500,000. I'm probably being too optimistic. My main concern, which has been pointed out several times by Undernews, it Obama's commitment to Bowles-Simpson which insists on considering Social Security as a part of the debt problem when in fact it helps finance the debt! Let's see if one or the other three parts of the government can stand up and say loud and clear that the ceiling on income subject to the payroll tax for SS should be raised or even (I would say) abolished! Ronald Reagan, Obama's political hero, did just that!