[Vision2020] The Fiscal Cliff Opener

[Art Deco]

  [image: The New York Times] <http://www.nytimes.com/>

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November 9, 2012
The Fiscal Cliff Opener

On Tuesday, voters re-elected a president who promised to fight for higher
taxes on the wealthy, for more public investment and for careful cuts in
spending. Three days later, President Obama challenged Republicans to
extend the Bush tax cuts for the middle class, right now, and said he would
not accept a deal that does not require the wealthy to pay a bigger share.

The House speaker, John Boehner, recycled positions that Mitt Romney and
Paul Ryan already offered, and voters rejected. He suggested that Congress
just put off dealing with the fiscal cliff, allow all the Bush tax cuts to
remain in place, and then negotiate tax reforms to lower rates even further
while closing unspecified loopholes.

These were the opening hands in negotiations that start next week: Mr.
Boehner’s weak hand and Mr. Obama’s strong one.

Both sides have acknowledged the need to avoid the fiscal cliff — the tax
increases and spending cuts that will take effect starting in January if
Congress does not act and that will total nearly $700 billion next year
alone. In a news conference on Friday morning, Mr. Boehner offered
conciliatory words that made it sound as though his caucus was at last open
to the obvious answers it has blocked for four years. But behind the words,
his party’s immediate goal was, as always, to extend the Bush-era tax cuts
for the rich.

Mr. Boehner did not rule out raising tax revenues altogether. But his talk
of eventually lowering rates while closing unnamed loopholes ignores the
fact that higher taxes for top earners are needed now to raise revenue for
public investments that are vital to economic recovery. The most expedient
and fairest way to do that is to allow the high-end Bush tax cuts to
expire. Until the rich pay more, there will be no later consensus on
spending cuts that eventually will be needed to curb long-term deficits.

Mr. Obama was explicit that the real challenge for Congress is to foster
job creation and economic growth. The fiscal cliff was front and center, he
explained, because of the year-end deadline, not because budget cutting is
more important than investments to create jobs.

Mr. Obama rejected the Republican claim that budget cuts in a weak economy
are the path to prosperity, and he said serious deficit reduction requires
both spending cuts and revenue. He did not specifically say, as he did many
times on the campaign trail, that Bush tax rates needed to expire, and that
when he talked about raising revenue, he meant raising tax rates and not
the inchoate promise of tax reform. But there was no give on his campaign
promise to ensure that the rich will pay more as part of the budget process
now under way.

Showing more determination and will to fight than he has at times in the
last four years, he said raising taxes on the rich was debated over and
over in the campaign. “And on Tuesday night, we found out that the majority
of Americans agree with my approach,” he said. Mr. Obama sensibly urged the
House to get started by passing legislation already approved by the Senate
that would extend Bush tax cuts for everyone below the $250,000 threshold.

It is altogether possible that the fiscal cliff problem will not be
resolved by the end of the year. Republicans have a taste for political
extortion and are, after all, used to Mr. Obama’s yielding to it. They may
be waiting to see if he blinks again. But he was not blinking on Friday,
and it is important that he stand firm.

If there is no agreement by Dec. 31, the Republicans will have allowed
taxes on middle-class Americans to go up needlessly — but the full brunt of
automatic tax increases and spending cuts would not be felt immediately.
Negotiators will have time to reach the type of accord Mr. Obama described
on Friday: “Reduce the deficit while still making the investments we need
to build a strong middle class and a strong economy.”

That is what he campaigned on, and won on.


-- 
Art Deco (Wayne A. Fox)
art.deco.studios at gmail.com
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