Obama’s Fiscal Cliff

By Glen Meakem

Immediately following the November elections, the Republican leadership in Congress tried to open the lines of communication and negotiate with President Obama regarding the coming “fiscal cliff.”  If reached, the fiscal cliff will be created by dramatic cuts in defense spending, and HUGE TAX INCREASES FOR ALL AMERICANS WHO WORK OR INVEST because the TAX RATES PUT IN PLACE BY PRESIDENT GEORGE W. BUSH WILL BE ELIMINATED.  Yes — despite nearly a decade of liberal media and Democrat Party lies to the contrary — the undeniable truth is that the Bush era tax rates provided enormous benefits to BOTH high achievers AND middle class people across America.   Now, there is almost universal agreement among economists that if we go over the “fiscal cliff” economic growth will turn negative and we will experience a deep new recession in 2013.  This, of course, would hurt all Americans.

In the weeks after the November elections, recognizing that the President did win a second term and hoping to avoid a deep, new recession, John Boehner announced that tax revenue increases were on the table along with real cuts in the growth of spending, and that he stood ready to compromise.  Whether you think Boehner’s opening position was a good political strategy or not, it is important to realize that President Obama — while demanding enormous concessions from Republicans — has refused to offer any substantive compromises of his own.  Instead, he has moved the goal posts further from a deal.  Obama demanded $1.6 trillion in tax hikes over ten years (double the $800 billion he was asking for during the election), $50 billion a year in new stimulus spending, and the power to continually raise the nation’s debt limit without congressional approval.  And the President wants these major spending and tax increases without any serious entitlement reforms.  These demands were so ridiculous, that Senate Minority Leader Mitch McConnell (R-KY) reportedly laughed out loud when Obama’s Treasury Secretary Tim Geithner presented the plan on Capitol Hill two weeks ago.

So, why is President Obama so unwilling to compromise, when economists agree that Obama’s current trends in spending are unsustainable and going over the fiscal cliff will create a recession in 2013?  I think Obama seems more than willing to take the plunge over the cliff because the cliff gives him all the tax increases and cuts in defense spending he really wants, while giving him the opportunity to blame Republicans for all the pain.  Last week, in an effort to change the game, the Republican leadership responded by offering a compromise plan of their own that includes the debt and deficit reduction framework outlined by the Democrats’ own Erskine Bowles (President Bill Clinton’s former Chief of Staff and co-chair of Obama’s own debt reduction committee).  The plan would raise tax revenue by limiting the number of tax deductions that economic achievers can take, an approach that Obama himself acknowledged would work in 2011 when he said, “Give us $1.2 trillion in additional revenues, which could be accomplished without hiking tax rates, but could simply be accomplished by eliminating loopholes.”  Republicans even promised that all new revenues would come from households earning more than $250,000 a year.  Consistent with the Bowles-Simpson framework, the Republicans also called for negotiations on the real drivers of our government’s massive annual deficits — out-of-control entitlement spending.

But, did Obama and the Democrats respond to this Republican gesture?  Heck no!  The President wants to go over the cliff.  Jay Carney (Obama’s White House Press Secretary) called the Republican offer “magic beans and fairy dust.”  This Monday, the Administration offered tax rate increases on achievers equal to $1.4 trillion over ten years, but still refused to name any cuts in the rate of spending increase that Democrats are willing to make.  This is no way to reach a bargain.  To find more evidence that Democrats really want to go over the cliff all you need to do is listen to Howard Dean (former Chairman of the DNC and 2004 Democratic Presidential Candidate) who said the following live on MSNBC last week.  “We’re not going to get out of this deficit problem unless we raise taxes across the board…  I actually think going off the cliff is actually a better solution to the nation’s fiscal ills…”

So at a minimum President Obama and the Democrats are willing to force an enormous tax rate increase on job creators and achievers that would destroy over 700,000 private sector jobs while ignoring our out-of-control spending.  And if they cannot achieve this, they are willing to accept the across the board tax rate increases they really want.  Despite all this, Republican leaders have failed to go on the offensive against Obama and the Democrat’s destructive tax and spend demands.  In their efforts to avoid both a new recession and blame from the main stream media, Republicans now appear increasingly desperate to avoid going over the fiscal cliff, a desperation that is boosting Obama’s “my way or the highway” approach to negotiation.

But since Obama has refused to negotiate in good faith with Republicans in Washington D.C., since Republicans have failed to seize both the political narrative and the political offensive, and since Democrats continue to state that we have a revenue problem, not a spending problem, perhaps Republicans should simply let Obama take us over HIS FISCAL CLIFF.  After all, this whole situation is Obama’s fault.  He is the President.  He owns it.  Perhaps going over the fiscal cliff with its tax increases on every American who works and invests will force Obama and other Democrats to really come to the table with leaders like Paul Ryan, and get serious about starting to solve our nation’s economic and fiscal challenges.  The bottom line is that we need bi-partisan tax, debt, and entitlement reforms that will finally put us back on the road to prosperity.  Americans of all stripes must understand this and demand it of our leaders, including President Obama.  He is the President.  He is responsible.  It is Obama’s fiscal cliff!

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