Thursday, January 3, 2013

Cliff Notes


Over the last couple of days it has been interesting to say the least reading the takes from both the Right and Left on the fiscal cliff deal. The Right took it as a complete rout by the President and a betrayal of their core beliefs; the Left took it as a capitulation by the President to just get a deal. Both sides ripped their respective leadership and would've preferred to go over the cliff rather than compromise.

Hmmm.

Okay, here's my final take on the deal.  First off, I agree that it was not the home run that the President needed and probably wanted.  It didn't have nearly enough revenue - $600 billion over ten years doesn't come close to closing the gap - and it didn't take the debt ceiling off the table. Secondly, I agree with some on the Left that Obama still has a problem negotiating from strength. He's way too reasonable. But the idea that going over the cliff was an acceptable strategy is sheer lunacy. Period.

As I mentioned in an earlier piece, yes Obama held all the cards. He clearly had the leverage in the negotiations with the GOP.  But make no mistake about it, that leverage would've started to erode the farther into January we got. The idea that Republicans would've been more amenable after the Bush tax cuts expired than before is wishful thinking to say the least. Assuming that McConnell and Boehner would've permitted an up and down vote on the taxes, you could've kissed the extension of unemployment benefits goodbye. And then there was the sequester. The automatic triggers would've kicked in on January 1, with no delay. No, my friends, Obama could not let that happen. The price you pay for being the adult in the room is that you have to behave, well, like the adult, even when you're surrounded by a bunch of screaming, spoiled brats.

When I look at the overall deal, I'd have to say there are more pluses than minuses. While some on the Left have criticized Obama's leadership style, I'd much rather be in his shoes than John Boehner's. Think about it.  In 2011, Obama agreed in principle to a grand bargain that called for $800 billion in revenue - none of it from higher tax rates - and $3 trillion in spending and entitlement cuts. The Speaker walked away from that deal after accusing the President of moving the goal posts on him. Then, after the November election, Obama agreed to move off the $250k line and instead make it $400k. He also included roughly $1 trillion in spending cuts as well as changing the way Social Security is paid out. Once more, Boehner walked away.

The deal that Congress just passed has a tax threshold of $400 thousand for individuals and $450 thousand for couples, no spending cuts and no entitlement reform. The reason for that? Simple: John Boehner simply refused to take "yes" for an answer. Each time he walked away, the deal kept getting worse and worse. He was finally forced to put a bill on the floor of the House that got more Democratic votes than Republican. That's called humiliation. No, my fellow progressives, I'd much rather be the President today than the Speaker of the House.

That being said, the lack of any grand bargain in this deal means that the next two months are going to make the last six weeks seem like a walk in the park. Obama is going to have a very difficult time extracting any more revenue from Republicans, even if said revenue is from closing loopholes and deductions. The sequestration is also due by the end of February. And then there's entitlement reform, the wet dream of every wing nut on the Right. Oh, and did I mention the continuing resolution is right around the corner, as well? The CR is how the government has been  funding itself for the last two years. Just thought you should know that in case it got lost in the shuffle.

Somewhere over the next twelve months, immigration reform and gun control could poke their heads out for a look see.

Yep, buckle up kids, this ride is about to get a whole more bumpy.

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