No, this blog entry isn’t about Cliff Clavin … you know that obnoxious know-it-all from the Cheers TV series. It’s again about the fiscal cliff and some more thoughts from another know-it-all, me. I have previously indicated that I thought that going over the fiscal cliff might be a good idea (see: The Fiscal Cliff). To me, this event seems increasingly likely … and my previous rational for accepting this outcome was based upon the notion that this might be the only way that the Republicans could force discretionary spending and entitlement cuts on the Democrat administration … none of which, it now appears, President Obama is willing to propose ... let alone implement.
Yes, the Republicans are likely to be blamed for the consequences of this event … and the Democrats are also likely immediately to propose legislation to cut tax rates for those making less than $250,000 ... which would then partially obviate the tax increases that just occurred. How does this play out? I suggest the following strategy for the Republicans:
1) Once the fiscal cliff occurs, go along with the Democrats and vote for the new Bush-style tax-rate cuts on 98% of the American public … particularly if they are to be made permanent. This way Republicans can stay true to their pledges of never increasing tax rates ... yet garner some gratitude of the middle class. (The tax increases for the upper 2% would have occurred without their assent ... as part of the fiscal cliff plunge.) This middle-class tax-cut passage might also remove some of the sting of the expected ensuing economic slow-down. If and when this occurs, the Republicans can point to the increased taxes on small businesses as the culprit.
2) President Obama will have gotten what he wanted on the revenue side and thus a lot of air will have gone out of his rhetorical balloon. Of course he will then be forced to govern under enormously reduced discretionary and entitlement spending … a good thing. The Republicans, having given up on revenue increases, may well have the upper hand politically in restoring any truly-needed government spending … particularly for the military.
3) There might be … just might be … somewhat of a thawing of relations between Obama and Congress and, as a consequence, there could then be progress on the serious issues of fixing the flaws in Obamacare and slowing much of Obama’s “progressive” agenda. (Nah, this is just wishful thinking.)
So, Republicans be not afraid of this fiscal cliff. It just may be that you can win by losing.