Tuesday, November 13, 2012

Contrast of conservatives: Brooks vs. Bartlett

By coincidence no doubt, the New York Times today showcases two diametrically opposed conservative approaches to fiscal cliff negotiations (in the parallel online/print universes): that of Bruce Bartlett, a genuine old-school deficit hawk, and of David Brooks, a well-meaning unwitting (if intermittent) sap for the current extremist frauds who dictate GOP policy.

Contemplating what Obama has called a "forcing mechanism" to give him his revenue increase -- the leverage afforded by the expiration of the Bush tax cuts -- Brooks urges a fresh bout of conciliation on the president:

Some on the left are suggesting that he adopt a strategy of confrontation and conquest. The president should use the advantages of victory to crush the spirit of the Republican House majority, they say. Reject the Grand Bargain approach. Instead, take the country over the so-called fiscal cliff. Blame it on the Republicans who are unwilling to even raise taxes on the rich. Wait until they fold, and then you will have your way. 

The first thing to say about this strategy is that it is irresponsible. The recovery is fragile. Europe may crater. China is ill. Business is pulling back at the mere anticipation of a fiscal cliff. It’s reckless to think you can manufacture an economic crisis for political leverage and then control the cascading results.
Obama has made it quite clear ever since he extended all the Bush cuts in late 2010 that he would not do so again. He ran for reelection as much on raising the top marginal income tax rates as on any one policy point.  In Brooks' lexicon, however holding firm on this point is "manufacturing a crisis" -- notwithstanding that Obama could virtually dictate terms in early January before any tax increase takes effect. For rebuttal in detail, let's turn to Bartlett, who has actual extended experience creating tax policy:
In December 2010, the economy was too fragile to take risks, even temporarily. President Obama had no choice but to cave. Today, the president’s hand is greatly strengthened, the economy is much stronger, and he is running out of time to get America’s fiscal house in order on his watch. Republicans are chastened by their defeat, and he will never hold a stronger hand against them than he does now. Therefore, taking the risks with the tax cuts, at least temporarily, is now a viable option.

If things go bad because of Republican inflexibility, the political dynamics change completely in January. At that point, Republicans have to accept whatever tax cut Obama is willing to support to replace the Bush tax cuts in whole or part. His veto pen would be enough to force Republicans to negotiate in good faith for a change, even if Democrats didn’t control the Senate.

Any 2013 tax cut that would offset the effect of allowing the Bush tax cuts to expire can easily be made retroactive. The Internal Revenue Service can delay changing withholding tables for average wage earners if it chooses, on the assumption that their tax cuts will be preserved under any possible compromise, thus forestalling any impact from the fiscal cliff on the vast majority of Americans.

And here’s the kicker. All President Obama has to do is insist that whatever retroactive tax cuts are enacted next year be temporary. Not only will this mitigate the impact of higher taxes for the same reason that temporary tax cuts are limited in their impact, but he will have another opportunity in a year or two to bludgeon Republicans back to the negotiating table, where their adamant opposition to higher taxes will again be negated by an automatic tax increase absent Congressional action.
 "Bludgeon Republicans back to the negotiating table."  In Brooksville, of course, this is a Very Bad Thing to do:
Obama could probably triumph in a short-term confrontation, pushing through higher tax rates on the rich that wouldn’t even produce enough revenue to cover a tenth of the deficit. But he’d sow such bitterness that it would be the last thing he’d pass for the rest of his term. The Republican House majority isn’t going to magically disappear.
Treating the stonewalling, hostage-taking, demonizing-centrist-policies GOP opposition as good-faith negotiating partners has worked out great for Obama in the past, hasn't it? There are hopeful signs that after being forced to the wall by negotiating under the debt ceiling dagger in the summer of 2011, Obama has put that approach behind him; he understands that the current GOP responds only to "bludgeoning." Brooks, however, is still doing psychological penance for acknowledging that Republicans were insane to pass up the revenue-poor grand bargain Obama was prepared to sign in that too-hot debt ceiling summer.  He still dreams that Obama abjuring leverage will usher in a new era of good feelings.

1 comment:

  1. Good piece. Forwarding Bartlett's bit on to Obama. Thanks.