On the brink of the fiscal cliff – and it’s no road movie
You can see why Thelma and Louise went over the cliff in the movie. They had killed too many men to escape the harshest justice.
They had thumbed their nose at the rest and the dozens of cops who had pursued them to the edge of the rocky abyss were dying to pull the trigger anyway.
So a suicide pact probably seemed like the best exit strategy. The Republicans and Democrats locking horns in Washington over how to avoid the so called fiscal cliff don’t have that excuse.
Whether it’s a cliff or a slope or a spiral everyone seems to agree that the consequences will be miserable for an economy struggling to recover. An automatic cut of 350 billion dollars in spending from defense to social programs may fill some of the vast hole created by America’s mushrooming budget deficit but it is like performing heart surgery with an axe.
Equally the tax increases –roughly worth 300 billion- which will kick in automatically effect not just America’s richest. They hit everyone and in proportional terms they will hurt the less well off far more than the well healed. The country is almost certain to slide back into recession.
The end of tax breaks on mortgage interest will hurt the housing market just as it is showing the pulse of recovery. And since Europe languishes in the doldrums and China is sputtering, America’s probable return to the emergency ward is altogether a bad idea for all of us. Lawmakers were perfectly aware of these costs when they passed the law that will result in the cliff.
That was the point. The cliff was supposed to be the gun both sides were holding to each other’s temples in a desperate effort to concentrate minds. But since the election both Republicans and Democrats seemed to have grown comfortable with the gun.
The president is newly emboldened by his election victory and has told his Republican opponents in Congress that he is no longer in the mood to make concessions, as he did in his first term. “No more Mr.Nice guy”, he is telling them. “It didn’t work the first time and you don’t deserve it a second time.”
The Republican crop who have been returned to form the 113th Congress are an even more radical lot –as indeed are the Democrats – than the previous bunch. They have no need to compromise and stick rigidly to the dictum of “no new taxes”.
Ever since George H “read my lips” W Bush broke that promise and lost an election, no conservatives have dared to enter the minefield of tax hikes. Given the vast gulf in income between the 1 percent and everyone else it really is time to move on. Just ask Mitt Romney’s advisers, still licking their wounds after an election that they think they should have won, given the state of the economy.
One would hope that a compromise can be found increasing the tax rates of those who earn half a million dollars a year. Even if they had to cough up 39 percent that would still be less than they were paying under that great Republican icon Ronald Reagan.
President Obama is betting that Republicans who have more to lose from the cliff financially and politically will cave in before the end of the year. So far there is nothing to indicate that his game of brinkmanship is paying off. Perhaps the season of Christmas parties and egg noggs will soften everyone’s tempers.
But don’t bet on it. Even if we fall off the cliff and half the country blames Republican intransigence more people will feel the president has shown poor leadership and failed to rise above the bitter party-political fray.
It won’t matter in terms of votes. He will never have to face another election. But it could damage his legacy. And legacy protection and perfection is what second terms are all about.
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