Saturday, December 29, 2012

The dangers of last-minute dealing

Greg Sargent is salivating at the prospect of Obama daring the Senate GOP to veto a stripped-down fiscal cliff bill that would raise marginal rates on the top two brackets and extend unemployment benefits, the Earned Income Tax Credit and the child tax credit.  Jonathan Cohn, while acknowledging the dangers of going over the cliff, is cautiously optimistic that if we do so Obama will be able to a) impose a better deal, and b) blame Republicans for the deadlock:
And then there are the polls, which suggest that the public overwhelmingly blames Republicans, rather than Obama, for inaction. Polls don’t always predict how people will react to actual political developments in real time. But chances are good that, the longer it takes for a deal, the more pressure Republicans will feel from the voters—not to mention their supporters in the business community—to abandon their opposition to tax increases and determination to cut entitlements.
Since those writings, though, reports have tilted toward optimism that Reid and McConnell will work out a stripped-down deal prior to the deadline that will raise rates only above a higher income threshold, probably $400,000--500,000.  In his Friday statement, Obama put a good deal of pressure on them to do so.  And such a deal could not only cause Democrats agony by giving away too much, but also, potentially, swing the blame game the other way.

That is, what if Reid and McConnell come up with something, blessed by Obama, that from a progressive point of view extracts too high a blood price for avoiding the cliff, and House Democrats balk at it?  Say the income tax hike not only starts at a high income level but also stops shy of the top Clinton-era rate or doesn't raise taxes on investment income, and leaves the estate tax at current low levels, and leaves the debt ceiling looming, and doesn't bring home all, part or most of the unemployment/EITC/CTC/college tuition tax deduction wish list? (I gather that the payroll tax cut is already gone.) If a majority of House Democrats as well as Republicans don't support it, does blame for going over the cliff not get shared equally? Does Obama not lose the clarity of insisting on an up-or-down vote on the limited bill he proposed?

1 comment:

  1. Pelosi's proven to be a very good vote counter, and she probably doesn't trust Boehner to deliver all the votes he claims, since he failed on the first attempt at TARP. I suspect the only way they run this through the Senate is if it's pretty much guaranteed to pass with a lot of Democratic votes.