Blog Credo

The whole aim of practical politics is to keep the populace alarmed (and hence clamorous to be led to safety) by menacing it with an endless series of hobgoblins, all of them imaginary.

H.L. Mencken

Monday, November 12, 2012

The Fiscal Cliff

This otter has more leverage than John Boehner right now.  He has a hammer.

The "fiscal cliff" is all the rage in Washington right now.  Even though seven House races and possibly one Senate race are still up in the air, we have to move on to the next thing.

First of all, the fiscal cliff is poorly named.  It is not a fiscal cliff.  It is a fiscal solution.  If no deal is made, taxes go up and spending goes down... bye bye budget deficit, hello austerity driven recession.  The economy will suck some more, but the deficit will largely be taken care of.

Second, it's pretty obvious that Obama holds most of the cards here.  Unlike the summer of 2011, he doesn't have to give in to the hostage takers in order to win re-election.

Finally, the GOP have committed to some stupid-ass pledge about not raising taxes.  Ever.  Under penalty of death.


On January 1st, taxes go up on everyone.  The GOP won't have to vote on it, it will just happen.

Then, on January 2nd, they can pass a bill cutting taxes on everyone but the top earners.  They haven't violated their pledge to Norquist and they have cut taxes on millions of Americans.

This doesn't address the sequester, which is a separate and more complicated problem.  But there is common ground there in that many of the cuts happen to defense, so the GOP will have to negotiate something.

Sadly, this means we won't tackle real tax reform, like getting rid of the carried interest loophole, but the "fiscal cliff" is not a crisis like the debt ceiling was.

That won't come until February.

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