What prompted my post from last night was thinking about the “fiscal cliff.” I admit, it is fun to see the Obama putting the screws to Boehner. It is also fun to see all the frantic efforts to parse the meaning of the Norquist pledge. And yet, I think there is a historic opportunity here that I wonder if we’re missing.
From my perspective, the “cliff” is really more of a speed bump. If we go over it and do literally nothing, the economy will slow for a quarter or two, but ultimately it would put us on a much better road. According to CBO, if we do nothing and tax rates go back to the 2000 levels, revenues will gradually increase to about 21-22% of GDP. This is precisely where they need to be in order to make current social programs sustainable. That does not ensure budget surpluses, but it would leave deficits small and manageable. That’s the bitch about the current debate. The only reason people talk about the “need” for entitlement reform is because we’ve cut taxes so much over the past decade that the we’ve created a crisis (or at least the appearance of one).
Obama’s proposal, which ultimately keeps in place the vast majority of the tax cuts, does promise to reduce the deficit, but I fear not enough to take away its political teeth. It means that right wingers will be able to continue to fearmonger on deficits as a excuse to attack safety net programs and health care. It means that “serious centrists” will give cover to attacks on Social Security and Medicare/Medicaid. And, by the way, it also means that when interest rates do rise, that there will be a genuine squeeze on the federal budget due to interest payments. This is not “concern trolling,” it is merely noting real political dynamics.
Changing the debate requires higher taxes than even what Obama is proposing. He has all the leverage. He’s going to get what he wants here, and we’ll all enjoy seeing Boehner and the other nutters have to surrender, but we’ll have won a battle and not the war, and worse by winning the battle on problematic terms we’ll make the war harder to win.
TL;DR version: I’m calling my representatives and telling them I’d like them to do nothing at all about the fiscal cliff. Not now, not at after January 1. Going back to the 2000 rates across the board would be the best thing for our country, even though the short-term pain would genuinely be painful. But you can’t undo a decade of terrible GOP initiatives without pain unfortunately.