Of all the stuff I’ve been reading of late about the so-called fiscal cliff — and there’s been lots of it — THIS PREDICTION passed along by Bill King strikes me as the most likely scenario:
It appears the only real stumbling block to a short-term deal is the president’s insistence that taxes for those making more than $250,000 go back to the Clinton era rates. Having campaigned heavily on that issue, he can hardly back down. For most Republicans, raising the rate is anathema because of their pledge to Grover Norquist to not vote for a tax increase.
Republicans are between a rock and a hard spot on this one. A large majority of the American people favor increasing taxes on the wealthy. It would be political suicide for the GOP to insist we pass up a tax cut for 98 percent of Americans to protect the wealthiest Americans from a tax increase. Such a spectacle would almost certainly sweep the party from control of the House in the mid-term elections.
Ironically, Republicans are trying to protect a group that does not appear to feel like it needs protecting. An American Express poll of the top 1 percent of income earners (more than $450,000 annually) found that 62 percent were OK with their taxes being raised. So the Republican insistence on no tax increase for the wealthy really is a political position without a constituency.
I talked to an old Capitol Hill hand this week who predicted the following: There will be no deal before Jan. 2, and all of the spending cuts and tax increases will, at least technically, go into effect. However, within a matter of days, or perhaps even hours, a preapproved package will be adopted by both sides that rolls back some of the spending cuts and many of the tax increases, but leaves the new higher rates on the wealthy intact. When this “package” is brought to the floor of the House, tax rates will have already gone up, and so a vote to approve the package will technically be a vote to reduce tax rates. Thus, a Republican who has signed Norquist’s pledge can honestly say he or she never voted to increase taxes.