Ok, first of all, after the debacle of 2000 and the probably maybe operationally assisted or in other words stolen election of 2004, GWB claimed a mandate for his ideas and proceeded to scorch the earth with them without regard for what America really wanted or who gave a shit. It was the chance of a century for the deregulators and the supply-siders and the neo cons and post-liberals and all the other demagogues of wealth worship.
And it created nothing worth a crap for anyone but the folks at the very top, who didn’t need a hand up as I recall.
Obama just won the kind of election that on the Right would be hailed as a landslide of historic proportions. He needs to act like it right now, before the confetti gets cleaned up and someone notices there is work to do.
That means going “all in” on a rush to the fiscal cliff. Now, the entire collective mind of Washington is going to be in a panic about this fiscal cliff we keep hearing about. The thing to remember is that as long as you trust your cape and focus, cliffs are no big deal.
John Boehner actually had the balls today to bring up the widely discredited notion that reducing tax rates will increase revenues for the government. It won’t. He’s lying. He knows it too. It’s all about the negotiation. That’s the Republican starting point.
In case you didn’t know, the whole “reducing tax rates equals increased revenue” thing only works in a narrow set of circumstances, like high tax rates for a good while, coupled with high inflation, coupled with all the other things that were happening at the precise moment that Jimmy Carter was making his famous malaise speech before Congress. None of that is true now. Taxes are historically low already, so lowering them is not a sudden unexpected jolt to the economy. There’s way too much saving going on. Profits are high right now, not stagnant like they were in 1979. The Stock Market is in pretty good shape all things considered, and has pretty much recovered the ground it lost in the Great Recession. There is no correlation between the reality of today and the circumstances it would take to make lowering taxes on wealthy people make sense. It’s a stupid idea, plain and simple.
Yet, it is also an article of faith in the Republican Party, so it has to be trotted out with the incense burners and the sacrificial low wage earners whenever the Republican believers get together to talk fiscal policy. And it is the natural starting place of any negotiation they undertake.
The Democrats need to match that with an equally unrealistic assertion on their side. Capital gains taxed as regular income. No, More than that. These people didn’t work for this money, so let’s tax it like gifts or inheritance. Let’s tax it at twice the rate of income. How do you like them apples? And we are going to outlaw offshore tax havens altogether. Any American money left in an offshore account beyond the beginning of 2014 will be declared unprotected by the American government and subject to seizure at the whim of whatever country possesses the cash. We won’t bomb you to get the rich their money back. They didn’t pay taxes on it, so it doesn’t really count. Have at it. Now there’s a beginning position. Democrats have to stop being wussies and learn how to exaggerate.
What I predict will be the real things at issue this winter will be capital gains tax rates, (which has been telegraphed by both sides) a few harmless loopholes, and the top tier of the GWB tax cuts. The so-called grand bargain does not have to be all that grand to work. In fact, the less grand it is the better.
On the spending cut side, the Republicans are going to want to starve the baby health care law to death, since they can’t muster the votes to kill it outright. They also have their eye on the prize so to speak when it comes to Social Security. They genuinely want a world in which some schmuck in a Wall Street office makes a profit on all that cash. (Apparently they do realize that is already the case. What they really want is for the average person to be able to lose all that cash. That’s the key.) Next to Education, it’s one of the last untapped resources in America and it will go at some point.
I don’t expect Obama to cave quite so much in a second term, and the House made progress towards the left precisely because of the perception that it was the Republicans who were behind all the blockage and filibuster of the last Congress. So the Democrats are in the drivers seat here.
If they can design something that saves face for the Right, like defense spending saved from the knife, some sacrifice on the health care law implementation (which will mean that it won’t actually save anybody any money, as if anyone believed it would to begin with) and some token take-aways from the working poor in terms of tax credits, they should be able to get ninety percent of what they want, which is to have the top tier of Bush cuts gone, the capital gains tax raised to some semblance of sanity and some revenue generated out of interest and dividends.
My hope is that the Democrats see themselves as the winners here and are willing to spend the political capital it takes to prove it.