Once again the Republicans find themselves being out maneuvered by the President and other Democrats...this time it's the much-ballyhooed "fiscal cliff" vs tax rates debacle.
The President would like the R's to simply give in and raise the tax rates for folks making over 250k. The additional revenue won't make much of a difference on the budget nor deficit nor the GDP nor the unemployment rate nor the housing crisis nor just about anything that has to do with the economy, but it will further the D's "divide and conquer through class-warfare" strategy. If the R's don't bow to the demands of the President, we go over the cliff. Now, the CBO has a pretty good 5-year projection on what going over the cliff will cause...unemployment to fall to 5.5% and GDP to rise to near, or at, full output. Sounds pretty good. Of course if you listen to the MSM or the D's (not that there's much of a difference) going over the cliff will drive unemployment to +10% and actually put us into a recession. Apparently the fact that that's exactly what happened after years of stimulus spending and tax cuts is lost on the D's. Anyway, the Budget Control Act of 2012 ("fiscal cliff) scenario is actually pretty good compared to where we've been and what we're likely to get from a rushed, "negotiated" deal out of DC. But, back to the here and now...if we go over the cliff everybody loses their Bush tax cuts Jan 1. On Jan 2, BHO will blame the R's and then call for tax breaks for the middle class...and none for the 2%'ers. The D's will gladly introduce the bill and force R's to either vote for a middle class tax break - and let the new higher taxes on the "rich" stand, or the R's will have to vote against a MC tax break - and the "rich", along with the rest of us, will get stuck with higher taxes. Either way, the R's look like they're being unreasonable, stubborn and in bed with the "rich" folks. So, what to do?
Offer a 2% tax increase on those earning over $1,000,000 (call it the Obama tax) right now. BHO will either accept it, which allows the R's to be the "good guys" or he will reject it...the R's will still look good and folks will begin to wonder what the President's true motive are.
If rejected, the R's should offer a 2.5% tax increase on those earning over $1,000,000 but only if .5% goes to reducing the debt.
If rejected, the R's should offer a 3.0% tax increase on those earning over $1,000,000 but only if 1% goes to reducing the debt.
At some point the President is going to begin to look foolish for not taking Yes for an answer. The R's are offering higher taxes on millionaires while extending the Bush MC tax cuts....yet BHO won't accept it?
At no time should the R's agree to open negotiations on budget cuts. Those cuts were already negotiated by the President and he agreed to them. They are key to reforming government. Don't let him off the hook on what is the central issue of our fiscal problem...government spending. Give him a tax increase on millionaires while protecting the Bush MC tax cuts...and in exchange the R's also get sweeping and significant cuts in spending. According to the CBO, if we go off the "cliff", we'll see GDP shrink for two quarters (but not go negative) and then rebound smartly. Unemployment will bump up to 9.1% by the end of 2013 but then rapidly decrease. Mid-terms aren't until 2014 so whatever "blame" BHO tries to put on the Rs won't mean much...the economy will be in much better shape because of the spending cuts and increased revenue...and we got them because Republicans provided leadership, and compromise, in 2012. A modest increase on taxes for those making over $1,000,000 while protecting the Bush MC tax cuts and demanding substantial spending cuts sounds like the perfect Christmas present for the nation.
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