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Happy Fiscal Cliff Eve!

The situation in Washington regarding the so-called fiscal cliff might have changed by the time you read this post, but HERE‘s one interesting angle that pertains at this writing:

To many Americans, what’s going on in Washington looks like a circus show that isn’t the least bit entertaining — the nation’s leaders seemingly unable to come up with a deal that keeps most people from paying higher taxes.

But there is a logic to it. For all the posturing of the last few weeks, both sides see a measure of political upside in going over the “fiscal cliff” — or, at the least, an advantage in waiting until the last minute, since they want to avoid drawing the ire of their most loyal supporters by appearing to cave too quickly.

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For both parties, there are some logical incentives to go over the cliff.

Democrats are fresh off electoral victory in November and fighting a reputation that they too easily give ground. The way they see it, they’ll get what they want no matter what. Either they get a deal that includes tax increases on the wealthy or they go over the cliff. At that point, taxes would go up for everyone, and the Democrats would immediately move to cut rates for all but the wealthy.

They may, in fact, get more of what they want by waiting. As of late Sunday, for instance, Democrats appeared willing to agree to raise rates only for those making more than $400,000. But if they go over the cliff, Democrats would have less need to negotiate and could seek to set that number at $250,000, their original goal.

(Snip)

Republicans, who control the House and still maintain a good bit of power in Washington, also see the merits of going over the cliff.

Not voting for a deal means not voting for a tax increase, which has been a central tenet of the party for more than two decades. Many Republican lawmakers are loath to give up their purity on the issue, in part because they are more concerned about a primary challenge than their standing in national opinion polls.

If they go over the cliff, they, too, could quickly move to cut taxes. In the meantime, they would seek to blame President Obama and other Democrats for the largest tax increase in generations.

Many Republicans also believe they can get a better deal with Democrats in an upcoming debate over the nation’s debt limit. In about two months, the government will no longer be able to pay its bills unless Congress takes action to raise the limit on federal borrowing. Many in the GOP think that deadline gives them the upper hand.

 

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2 Comments

  1. We are all screwed.

    Happy New Year!

  2. Happy Fiscal Cliff Eve too

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