Let’s understand President Obama’s strategy in the “fiscal cliff”
negotiations.
It has nothing to do with economics or real fiscal reform.
This is entirely about politics. It’s Phase 2 of the 2012 campaign. The election
returned him to office. The fiscal cliff negotiations are designed to break the
Republican opposition and grant him political supremacy, something he thinks he
earned with his landslide 2.8-point victory margin on Election Day.
This
is why he sent Treasury Secretary Tim Geithner to the Republicans to convey not
a negotiating offer but a demand for unconditional surrender. House Speaker John
Boehner had made a peace offering of $800 billion in new revenues. Geithner
pocketed Boehner’s $800b., doubled it to $1.6 trillion, offered risible cuts
that in 2013 would actually be exceeded by new stimulus spending, and then
demanded that Congress turn over to the president all power over the debt
ceiling.
Boehner was stunned. Mitch McConnell laughed out loud. In nobler
days, they’d have offered Geithner a pistol and an early-morning appointment at
Weehawken.
Alas, Boehner gave again, coming back a week later with
spending-cut suggestions – as demanded by Geithner – only to have them dismissed
with a wave of the hand.
What’s going on here? Having taken Boehner’s
sword, and then his shirt, Obama sent Geithner to demand Boehner’s trousers.
Perhaps this is what Obama means by a balanced approach.
He pretends that
Boehner’s offer to raise revenues by eliminating deductions rather than by
raising rates is fiscally impossible.
But on July 22, 2011, Obama had
said that “$1.2 trillion in additional revenues... could be accomplished
without hiking tax rates, but could simply be accomplished by eliminating
loopholes, eliminating some deductions and engaging in a tax reform
process.”
Which is exactly what the Republicans are offering
today.
As for the alleged curative effect on debt of Obama’s tax-rate
demand – the full rate hike on the “rich” would have reduced the 2012 deficit
from $1.10 trillion to $1.02 trillion.
That’s a joke, a rounding
error.
Such nonsense abounds because Obama’s objective in these
negotiations is not economic but political: not to solve the debt crisis but to
fracture the Republican majority in the House. Get Boehner to cave, pass the tax
hike with Democratic votes provided by Minority Leader Nancy Pelosi, and let the
Republican civil war begin.
It doesn’t even matter whether Boehner gets
deposed as speaker. Either way, the Republican House would be neutered, giving
Obama a free hand to dominate Washington and fashion the entitlement state of
his liking.
This is partisan zero-sum politics. Nothing more. Obama has
never shown interest in genuine debt reduction. He does nothing for two years,
then spends the next two ignoring his own debt-reduction commission. In less
than four years, he has increased US public debt by a staggering 83 percent. As
a percentage of GDP, the real marker of national solvency, it has spiked from
45% to 70%.
Obama has never once publicly suggested a structural cut in
entitlements. On the contrary, he created an entirely new entitlement –
Obamacare – that, according to the CBO, will increase spending by $1.7
trillion.
What’s he thinking? Doesn’t Obama see looming ahead the real
economic cliff – a European-like collapse under the burden of unsustainable
debt? Perhaps, but he wants to complete his avowedly transformational
social-democratic agenda first, and let his successors – likely Republican – act
as tax collectors on the middle class (where the real money is) and takers of
subsidies from the mouths of babes.
Or possibly Obama will get fiscal
religion and undertake tax and entitlement reform in his second term – but only
after having destroyed the Republican opposition so that he can carry out the
reformation on his own ideological terms.
What should Republicans do?
Stop giving stuff away. If Obama remains intransigent, let him be the one to
take us over the cliff. And then let the new House, which is sworn in weeks
before the president, immediately introduce and pass a full across-the-board
restoration of the Bush tax cuts.
Obama will counter with the usual
all-but- the-rich tax cut – as the markets gyrate and the economy begins to
wobble under his feet.
Result? We’re back to square one, but with a more
level playing field. The risk to Obama will be rising and the debt ceiling will
be looming. Most important of all, however, Republicans will still be in
possession of their unity, their self-respect – and their
trousers.
Charles Krauthammer’s email address is letters@charleskrauthammer.com.
(c) 2012, The Washington Post Writers Group