Is it a fiscal cliff or merely a bump in the road?

by Linda Beale

Is it a fiscal cliff or merely a bump in the road?

Sixty percent of American voters in exit polls indicated that they supported higher taxes for the wealthy, see here.  Even some arch conservatives are acknowledging that some tax increases won’t do terrible harm.  Id. (noting that the Wall Street Journal’s Stephen Moore acknowledged that Obama “can claim that he’s got a voter mandate to do that [raise taxes on the rich].” Even Conservative Weekly Standard Editor Bill Kristol counseled Republican leadership to get real.

You know what? It won’t kill the country if Republicans raise taxes a littlbe bit on millionaires.  It really won’t, I don’t think.  …  Really? The Republican party is gonna fall on its sword to defend a bunch of millionaires, half of whom voted Democratic, and half of whom live in Hollywood and are hostile to Republicans?  Nicole Flatow, Weekly Standard Editor Bill Kristol: Raising Millionaires’ Taxes ‘Won’t Kill the Country’, ThinkProgress (Nov. 11, 2012).

Nonetheless, the House and Senate Republican leadership (Rep. Boehner and Sen. McConnell) are insisting that they will not allow tax rates to rise.   McConnell told the following:

One issue I’ve never been conflicted about is taxes. I wasn’t sent to Washington to raise anybody’s taxes to pay for more wasteful spending and this election doesn’t change my principles. This election was a disappointment, without doubt, but let’s be clear about something: the House is still run by Republicans, and Republicans still maintain a robust minority in the Senate. I know some people out there think Tuesday’s results mean Republicans in Washington are now going to roll over and agree to Democrat demands that we hike tax rates before the end of the year. I’m here to tell them there is no truth to that notion whatsoever.  Annie-Rose Strasser, Senate Minority Leader: We Won’t Raise Taxes At All, ThinkProgress (Nov. 9, 2012).

President Obama Friday invited Congress to sign off on a tax cut for the middle class right away– noting that just extending the Bush tax cuts for those who make less than $250,000 would give a tax cut to 98 percent of Americans and 97 percent of small businesses.

“While there may be disagreements in Congress over whether to raise taxes on people making *over* $250,000 a year, nobody — not Republicans, not Democrats — want taxes to go up for folks making under $250,000 a year,” Obama said. “So let’s not wait.”  Adele M. Stan, Obama throws down gauntlet on fiscal cliff, (Nov. 10, 2012).

Robert Reich, now at the University of California at Berkeley, writes that the game of chicken is on.
So who blinks first? Democrats who don’t mind going over the cliff because they’ll get a better final deal – and the deal will be retroactive to January 1st so it’s not really a cliff at all but more like a little hill? Or Republicans who want to extend the Bush tax cuts beyond January 1st, until we get sufficiently close to the debt ceiling that they can once again threaten the full faith and credit of America?

As I said before, I had naively assumed the election would put an end to these games, but obviously not. Yet Obama and the Democrats are holding most of the cards now. Let’s hope they use them.  Robert Reich, Get ready for an economic game of chicken, (Nov. 9, 2012).

cross posted with   ataxingmatter