Fiscal Cliff 2013: GOP Will Have to Raise Taxes On the Wealthy, Or Face Deliberate Humiliation By Obama


Ever gone off a cliff before?

Strap in, because it’s looking increasingly like you might on January 1 – right as the champagne corks are popping. At issue is the expiration of the Bush tax cuts, which will raise taxes by $2,000 or more for middle class families. Should the lower rates for the top 2% of earners expire? President Obama insists they should, and that the rich should pay their “fair share;” Republicans, led by Speaker of the House John Boehner (R-Ohio), would prefer they not and that the law treat everyone equally.

The Republican playbook, at this point, is clear. The Norquist tax pledge, once sacrosanct, has been made a lower priority by several leading Republicans, most notably Senators Saxby Chambliss (R-Ga.) and Bob Corker (R-Tenn.), who recognize the need for compromise in the wake of a Democratic election, as well as Senator Lindsey Graham (R-S.C.). Former Mississippi Governor Haley Barbour, although emphasizing he thinks raising taxes in a recession is bad economic policy, has also indicated Republicans should be willing to soften the anti-tax stance.

But in return for giving ground on taxes, Republicans have every right to expect the White House to meet them halfway on spending cuts and entitlement reform. This was the principle agreed to tentatively in last year’s debt ceiling negotiations: Republicans would accept the need for an increase in revenue (as a result of raising the debt ceiling; or, the functional equivalent today, of a tax increase on the top 1% or 2% of earners as a result of the expiration of the Bush tax cuts), and the White House would accept deep spending cuts. The three elements of reform were a possible tax increase on top earners, deep spending cuts, and baby steps towards Social Security, Medicare, and Medicaid reform.

Shockingly – or perhaps not so shockingly given that it’s now one Democratic presidential election victory later – the White House is insisting that the GOP agree to tax increases without any – that’s right, any – spending cuts. Or, yes, the spending cuts are supposed to come next year. Which, in Washington speak, means they won’t happen at all.

A cynic might say that, having won the election, President Obama – who with rank condescension warns the GOP that he won’t play their “games” – has shown his true colors.

Historians 50 years from now, free from the passions of the moment, will come to the conclusion already reached by one of the sharpest minds analyzing politics today: the party with the upper hand was trying to humiliate the opposition.

And an even greater cynic could conclude that President Obama and the Democrats want to go over the fiscal cliff. Consider the facts, according to this latter-day Diogenes: If we go over the cliff, taxes go up, giving Democrats the chance to enact “middle-class” tax cuts smaller than the amount by which taxes went up in the first place. Democrats could blame Republicans for the tax increases and don the mantle of tax cutters. There would be no spending cuts. There would not be the slightest glimmer of entitlement reform. A Democratic slam dunk.

President Obama clearly has the upper hand going into the home stretch. By large margins, the public favors increasing the rates on top earners. It is not enthusiastic about deep spending cuts. It wants to hear even less about effectively (as opposed to in the abstract) reining in entitlements.

So what’s the GOP to do? At all costs, it should resist Obama’s nihilistic willingness to take us over the cliff. That means acceding to higher rates on top earners. This will require a heroic effort from Boehner as he tries to convince the large Tea Party contingent in the House that violating a time-cherished principle is the right thing to do. Doing so is also the only option politically. The GOP cannot afford another “government shutdown” scenario in which Democrats and the mainstream media paint Republicans as indifferent to the fate of the average American.

Over and above that, the GOP must try to wring from the White House any concessions it can on spending and entitlement reform. It can look forward eagerly to the next debt ceiling debate, in March 2013, which will be a chance to take a stand and extract serious spending concessions without the imminent specter of Taxageddon. At the end of the day, though, this year’s Hobson’s choice may be such: humiliation at the hands of President Obama and the Democrats or owning the disaster of going over the cliff. The concrete particulars of that dilemma are not discernible at the moment. But the GOP will be fine long-term if it recognizes the cynicism that confronts it yet insists on seeing politics through the eyes of Cicero, ever tested and true: Salus Patriae Suprema Lex.

"The republic first."