In the end, the best Congress could do was a narrow compromise to avoid
everybody’s taxes from going up. In the modern polarized political age,
I guess that constitutes some sort of victory. But any true deficit
reduction — and remember this is supposed to be about cutting the
deficit — will only come through some combination of more revenue and
less government spending. And this deal to avoid America’s so-called
‘fiscal cliff’ merely kicked the spending can down the road for two more
months.
Republicans Give on Taxes
The tax issue is largely settled, at least for the moment. This is
thanks in large part to the fact that Republicans, the party known for
decades for its desire to cut taxes, were put in an impossible situation
by President Obama and the Democrats. House Republicans failed to come
up with an alternative to the Obama tax cut plan and that meant action
shifted to the Senate where pretty much nothing gets done anymore unless
there is some level of bipartisan support.
Once the Senate approved the compromise measure by an overwhelming 89-8
margin, it put House Republicans in the difficult position of either
going along to prevent a tax hike for everyone or standing alone on
principle, killing the deal and suffering the political consequences
from millions of angry voters looking for somebody to blame.
House Democrats supported the compromise joined by 85 House Republicans
to ensure passage. One-hundred-fifty-one House Republicans voted against
it, showing a clear split within the House Republican caucus as to what
political factors they felt were most important. Those Republicans who
supported the compromise were afraid they would be blamed for plunging
the country over the fiscal cliff if the deal was killed. But the other
151 Republicans who opposed it were upset at the lack of spending cuts
and are more fearful of conservative challenges in Republican primaries
where any votes in support of tax increases of any kind could be seen as
heresy.
Congressman Spencer Bachus of Alabama spoke for many of his House
Republican colleagues when he told the Washington Times, “I know the
president won his election, but I also won my election.”
To open the new Congress, House Speaker John Boehner narrowly won
re-election after several Republicans defected and voted for more
conservative choices. House Republicans are divided, but conservatives
and Tea Party supporters are already signaling to Boehner that there
will be trouble ahead if he tries to ignore their wishes in the battles
to come.
Old School Politics
Numerous press accounts of the behind the scenes maneuvering gave credit
to two old Senate hands for coming up with a compromise and preventing a
dive off the fiscal cliff. Senate
Republican leader Mitch McConnell, who is no slouch in the partisan
gamesmanship department, wasn’t getting anywhere with either Senate
Majority leader Harry Reid or the Obama White House. So he put in a call
to his old Senate colleague, Vice President Joe Biden, and the two men
were able to work out a deal that kept taxes lower for individuals
making less than $400,000 and couples making less than $450,000.
McConnell was forced to reach out to the vice president because the
relationship between Speaker Boehner and the White House was bad, and
the one between Boehner and Harry Reid was even worse. At one point a
few days before the January 1st deadline Reid took to the Senate floor
and accused Boehner of acting like a “dictator” in the House. When the
two men later went to the White House for talks as part of a larger
group, Boehner went up to Reid and told him, “Go f— yourself,” according
to the Washington Post.
Whoa, fellas, take it easy. Can’t we all get along?
Spending Battles Ahead
For those who thought the fiscal cliff battle might solve the
differences between the two parties once and for all, forget it. It
turns out it was merely the latest skirmish. Remember, the Tea
Party-backed Republicans who came to town in 2010 felt it their mission
not only to cut spending and permanently reduce the size of government,
but to no longer engage in Washington compromise either.
So we can look forward to another battle over spending as early as next
month when Congress will need to raise the debt limit so the government
can borrow more money to pay its bills. A similar showdown in 2011
resulted in Standard & Poor’s downgrading the U.S. government’s bond
rating.
And just beyond the debt ceiling fight, we can expect more battles over
spending when Congress will have to grapple with mandatory cuts to
defense and domestic spending that were delayed for two months as part
of the fiscal cliff compromise. And just in case we make it through
those two challenges, the funding measure that temporarily is funding
the U.S. government since last year expires on March 27th, forcing
Congress to come to an agreement or risk the possibility of a government
shutdown.
Clash of Worldviews
President
Obama won a second presidential term and hoped it would give him
political leverage in his future dealings with Republicans. The jury is
still out on that. The president and his Democratic allies were in a
very favorable position on the tax hike issue. No politician wants the
risk of being blamed for raising somebody’s taxes. But the coming
battles will focus on spending and that is an area where Republicans are
likely to be much more united. The president will likely not have the
same kind of leverage in these upcoming spending debates, even though he
has already laid out a marker that he will not negotiate with
Republicans over the debt ceiling limit.
Despite all the talk from Republicans, however, they still offer little
in the way of specific spending cuts they would like to consider. That’s
because specifics in this debate will spark an outcry from any number of
special interest groups that would suffer from the proposed cuts.
Democrats have played their tax card and will be pressured now to get
serious about finding common ground on cuts. But it’s likely the
Democratic strategy will be to force Republicans to get specific on cuts
first, putting them on the defensive and letting them take the heat. I’d
say, “Let the games begin,” but the fact is the game has been on for a
while and will continue through much of this year.
