Wednesday, December 26, 2012

Which Cans To Kick?

Matt Yglesias has a good item this morning about the possibility of pushing back the fiscal cliff deadline. Good topic, and I'm surprised there hasn't been more talk about it. Congress certainly could extend deadlines on everything for two weeks, four weeks, whatever, to allow time for negotiations to get done.

Of course, there's no reason that all the deadlines would have to be pushed back. Looking at the two big pieces of it:

The issue with taxes is that not only do liberals believe that the expiration of Bush-era tax rates gives them a bargaining advantage, but many Republicans may well prefer that outcome as well. I think if there was any information generated by the Plan B fiasco, it might have been just that: some Republicans really would prefer an eventual outcome that involves relatively higher tax rates as long as they don't have to make an affirmative vote for it. If that's true, then we have to go over the cliff to make a deal; expiration of the tax rates is basically a necessary condition for the votes that are going to be needed.

On the other hand, one would think that there may well be a coalition available to kick the spending can down the road. Most mainstream Democrats simply don't want the spending cuts that the sequester would make, certainly on the domestic side; they may like the level of Pentagon cuts, but even there many Democrats don't, and even more don't want Pentagon cuts carried out this way. On the Republican side, pro-military Members of Congress might be willing to suspend the sequester while a deal is in the works. The resistance to kicking the spending can down the road should come from those who really do want to slash government spending; they might fear, with good reason, that Democrats would lose the incentive to bargain if they believed they could just make the sequester go away. Still, hawks might argue that a one-time, short-term delay would be worth it because it would avoid disruptions in military procurement, and that Republicans could always pull the plug if Democrats responded by stalling and requesting more delays.

I'm not going to go into more of it, but don't forget that Bush-era tax cuts and the spending sequester are only two of the pieces of the "fiscal cliff." Yet another issue in any can-kicking is negotiating whether other things would be part of it, and the more complicated kicking-the-can negotiations get, the more it probably seems to everyone involved that they might as well just stick to the main negotiations.

At any rate: if there's to be any delay, it could come together very, very, quickly, as long as everyone agrees -- or it could take a week or more to pass, if a handful of Senators decide to grind things to a halt. I think the logic is there for a sequestration pause, but it's a pretty close call, depending mainly on the balance within the GOP between Pentagon hawks versus spending cut true believers. But don't expect anything on taxes; that part of the cliff is only going to be avoided if Republicans just decide to surrender in the next few days, and that seems very unlikely.

5 comments:

  1. I agree that Republicans may be willing to "go over the cliff" to allow tax rates to rise, then vote (presumably along with most Democrats) to lower taxes for most. Its a very silly and risky path to hold true to the stupid Norquist pledge.

    The big issue is that many Republicans (and myself) would like to see some serious commitment to cut spending. Though, to be honest, Republicans aren't "leading" much here either. But my sense is that any unilateral attempt by Repubs to cut spending will be demagogued by Dems and Obama. So Repubs need some commitment from Demos that they will take a few of the bullets. Until that is forthcoming, I foresee a big mess.

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  2. @Morgan,
    Unilateral solutions are demagogued by both sides, not just Dems, and they deserve it. They have generally been pretty crappy ideas, such cutting exclusively safety nets programs, or having another huge stimulus, or not having cuts at all.

    Obama has frequently said that he wants a grand bargain with cuts that "his side" won't like. So I don't know how you justify implying that commitment from the Dems isn't forthcoming. The GOP has been more the problem with their hesitation to come around to reality on tax rates.

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    1. @ModeratePoli I like what Obama is saying (in your post) but I'm not seeing any real push to achieve it. I not seeing any commitment from the Dems to cut spending that their side won't like. Hopefully I'm wrong and there is a lot of behind the scenes stuff happening and it will work out.

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    2. @Morgan, the reason the Dems don't make proposals for what to cut is that's "negotiating with themselves" and it effectively moves the starting line for negotiations in the wrong direction for them.

      As for Obama applying a push, who is Obama supposed to apply the push to? He's got his side pretty much in line without a lot of dissension being aired. I don't know what kind of push he can apply to the GOP. Can you elaborate what you think Obama should be doing but isn't?

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  3. Sorry for the slow reply. Holidays and all. In answer to your question, I'd like Dems / Obama to make one *concrete* proposal to cut spending, such as changing the inflation calculation for Social Security. When Republican Senators suggested this in the cliff negotiations, the response was "no way". I think Obama has to LEAD and take the bullet for this. Like Nixon to China, a Democrat President should broach some concrete ideas on cutting spending.

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