Published November 30, 2012
If you thought the bulk of our gridlocked politics would end in November, think again. The prospect of our country going off what’s referred to as the “fiscal cliff” has both the right and the left staking out their territory in a battle over how to handle our very unbalanced books.
President Obama and a good chunk of Democrats want to raise taxes on the nation’s highest earners. Though the president says he also wants to have a conversation about reforming entitlements, he hasn’t put any type of proposal on paper. Nor is the president or his party interested in serious spending cuts, aside from cuts to the Department of Defense, something Republicans argue would hurt our national security muscle in a time when we need it the most.
At the same time, Republicans have put forth plans to tackle the biggest driver of our debt—entitlements—and even had a presidential ticket that ran on those reforms. The House of Representatives has passed some version of these plans and Speaker John Boehner has adopted a Mitt Romney -- idea to eliminate certain deductions in order to raise revenue to pay down our debt. Raising taxes, however—on anyone—is not an option, they say. Unless one side caves, we’re slated to dive off the so-called "cliff" in December.
So why don’t Republicans just get out of the way and let it happen? It sounds crazy, but there is a case to be made.
Let Democrats bring a bill to increase spending on what Obama calls a second stimulus, raise taxes on high earners (including many small businesses) without doing a thing to fix Medicare and Social Security for current and future generations. Republicans can take a page of Obama’s playbook and vote present as he did when he was a senator. When the nation falls off the fiscal cliff, he can own it.
The tax increases that happen will be the Obama tax increases. When spending spikes, it can be the Obama tax and spend plan. And we slide into recession as the non-partisan Congressional Budget Office (CBO) predicts will happen, it will be the Obama recession. In other words, it's time for the right to call Obama's bluff.
Doing so would only further highlight the Democrats' fiscal cliff irresponsibility, especially that of Obama. He almost quadrupled federal spending to that of President George W. Bush, refused to make any changes to entitlements during the debt ceiling debate and has been pushing for higher taxes for years (even though in 2011 he said raising taxes on anyone in a recession would be a mistake when he extended the Bush tax cuts).
What’s worse? Many who voted for Obama would be disproportionately affected, and low income Americans will be affected the most. According to the Wall Street Journal, “a single unemployed person making less than $10,000 would see his or her taxes rise 55.2%. Loss of benefits for the working poor is a big factor. Many unemployed people also face loss of extended unemployment benefits.”
“An average married couple making $20,000 to $30,000 would sees their tax go up $1,423, from receiving a $15 refund to paying $1,408. Big factors include the loss of the Bush-era 10% bracket, the loss of relief from the so-called marriage penalty and reduction of the child credit. Average tax rate under the proposal: 5.5% Average federal tax change: Up $1,423, or 9,809%.”
College students would face an increase of 37.9% and the highest tax increase would hit retirees making around $40,000 at a whopping 42.4%.
Just this week, Warren Buffet argued that tax rates need to be more progressive. Many people don’t get that the Bush tax cuts already are. They created that beneficial 10% tax bracket for lower middle class earners and took a lot of poor Americans off the tax rolls altogether. The rich are paying more now than ever in taxes because they are making more, despite their rate being slightly lower.
Just like in Greece, unless people are affected by the gluttonous spending in Washington in a personal way, they are unlikely to wake up and support any kind of real reform. Plus, the economy is likely to correct itself even in a recession. It’s often the actions taken to prevent a recession that can do the most damage rather than letting it happen.
If a majority of the country elected Obama to four more years in the White House, then let them have it their way without GOP support.
Perhaps our nation needs to dive off the cliff in order to realize how dire our debt problem really is. Then maybe they'll support real change.
Plus, Republicans will get blamed anyway. The president’s current public relations tour across country on the fiscal cliff is designed for that exact purpose. It’s much easier than leading.
If as Obama has said, “the buck stops” with him, then let it. America will soon realize that elections do have consequences.