Karl Rove on the so-called "fiscal cliff"
by Linda Beale
Karl Rove on the so-called “fiscal cliff”
In a video interview available from Dow Jones/Wall Street Journal, “Karl Rove Doubts a Fiscal Cliff Deal Will Get Done” (Nov. 20, 2012), Karl Rove’s pre-Thanksgiving news to the world is exactly what one would expect from one of the most successful GOP strategists. He urges Repubicans to do everything possible to find “reasonable compromises without sacrificing principles”, which means entitlement reform coupled with offsetting revenues without increasing tax rates.
I. This is nothing new.
Rove doesn’t want the GOP to accept any rate increases and he does want the GOP to play the obstructionist role to the hilt unless they get their longed-for undermining of the New Deal Social Security, Medicare, and Medicaid programs.
The flawed argument is the same as Romney’s arrogant economic message in the presidential campaign–that increased revenues will come from economic growth gained from running the country’s economy to support Big Business. And the GOP insists that it will only happen if they can get the purported bad-guy Democrats to accede to the Republican policy demands of continued preferential taxation of the wealthy and corporate America, increased spending for the military, continued regulatory inattention to the financialization of the economy, combined with spending cuts to safety net programs.
Rove’s position essentially insists on the government folloowing the GOP’s long-debunked market fundamentalism that assumes that the “dynamics” of spending cuts to the GOP-hated so-called “entitlements” (and not to the GOP-loved military budget) will immediately cause the economy to bloom and result in all the revenues needed (by the “appropriately” shrunken federal government), while the elite continue to rip-off the economy with “rent” profits. And even if the “compromise” was to allow some increase in tax payments through cutting back deductions that primarily benefit the elite, one can imagine that those cutbacks will be relatively minor and short-lived.
II. The strategy is nonetheless revealing.
What is most interesting here is not Rove’s continued reliance on the same old failed Reaganomics arguments from the past re adhering to GOP “principles”. It is his post-election strategy for how to achieve it. He is “dubious” that a deal can get done in the few days left in this congressional session. His solution–Congress should agree to carry on the “status quo ante” for a few months andthen arrive at a solution.
Rove knows what progressives know (and what I’ve insisted on in this blog): the Democrats have the rare upper-hand at this point in the legislative cycle.
The Republicans agreed to the passage of a law (the so-called “sequester”) that cuts otherwise slated increases to the military and also cuts a variety of domestic non-military expenditures. The Republicans also joined with Democrats to pass a two-year extension of the Bush tax cuts two years ago, when they thought that they would control the White House and the Senate after the 2012 elections and be able, finally, to deliver on their original intent to make the “temporary” Bush tax cuts permanent, thus guaranteeing a crop of preferential tax provisions for the very wealthy and multinational corporations while carrying out their long-term objective of privatizing and reducing safety net programs like Social Security, Medicare and Medicaid.
Republicans have less ammunition to carry out their obstructionist and New Deal-defeating agenda–the laws that cut the military budget, protect the safety net programs, and increase tax rates are already enacted.
Unless the GOP can convince the public and the Dems in Congress that there really is a fiscal “cliff” that spells suicide for the US economy, they are caught short in their legislative strategy. They relied on a wipe-out victory in the 2012 elections. Permanent reductions in taxes for the rich, deregulation, privatization/decimation of the New Deal safety net programs, and ever-increasing support for the military are much less easily put into law without one-party control.
The Democrats should not be willing to negotiate against interest just to kick the ball down the road to a period when they will have fewer strategic advantages on their side! Democrats–with Obama in the lead–should insist on enactment of a bill making permanent tax cuts for the lower-middle and lower-income classes–ie, a group that almost no one thinks should have to pay more in a time of continuing slow growth out of the Bush recession years.
If the Republicans refuse to pass such a law, the Dems should not kow-tow to the GOP’s so-called “compromise” position of re-extending the full Bush tax cuts and caving to earned benefit program cuts. Instead, the Dems should let the Bush tax cuts expire as slated and do nothing about the sequester and by all means do nothing to reduce benefits to Social Security, Medicare or Medicaid. In January, President Obama and the progressives in the House and Senate should mount an aggressive campaign to pass a well-considered slate of tax cuts for the lower and lower-middle income distribution and a few well-targeted stimulus measures in support of public infrastructure and lower-income unemployment relief.
Only after those measures are in place should there be any discussion of an “overhaul” of the tax code–and that overhaul should be handled in the context of raising sufficient revenues to pay for things we as a people know we should provide–decent retirement and health care for elderly Americans, decent educational support for young Americans, decent opportunities for a sustainable life for poor Americans, and the revitalization of the middle class who have been the losers of the last decades of class warfare. The super-rich elite don’t deserve much attention at all in this debate–they have been the winners and their winning has not in any way built a sustainable, job-creating economy.
cross posted with ataxingmatter
Linda
i agree wholeheartedly with most of what you say here.
I wish you hadn’t spoiled it with “tax cuts for the middle class and the poor.” It sounds disingenuous and greedy.
The middle class and poor got the Bush tax cuts… and complained that the rich got the lions share… true. The problem, though, was the cuts. The poor didn’t get enough to matter. They don’t need them continued. At it would look more honest and refreshingly not-greedy to simply call for ending the tax cuts, all of them.
I know you believe… as Republicans all believe… that tax cuts are always good for the economy. But while that may be true in some circumstance, it is unlikely to be true in the present circumstances. The problem is not high taxes, the problem is that the people who get the tax cuts are not spending the money.
IF anything we need higher taxes and for the government to spend the money to create jobs and actually get some needed work done.
Meanwhile, raising the payroll tax one tenth of one percent per year for a few years would end the phony Social Security crisis, at a cost no one would notice. Except the liars who hate Social Security no matter what, and the poor sad “progressives” who think the poor shouldn’t have to pay anything they can force the rich to pay for…. Better, they think, to let the poor live in misery while they “fight the class war” to their own glory.
Me and most of “the poor” think it is better to pay for our own needs when we can, and hope for policies that make that easier for us, rather than rely on welfare and “tax the rich.”
The rich need to pay higher taxes, but if that’s all we have to offer them, we can’t be too surprised if they don’t take us seriously. And the poor continue to suffer.
Instead of raising taxes why not extract corporate back taxes & royalties?
for example…
http://www.sourcewatch.org/index.php?title=U.S._federal_oil_and_gas_royalties
Coberly: I agree with you that, as a general principal, all of the Bush tax cuts should simply be allowed to expire; they should never have been passed in the first place, just another monument to the high quality of that administration. However, the President does not agree; he is, for whatever reason, determined to have the lower rates for the lower levels of pay continue. I think Linda’s proposal, WITH the wording about the “tax cuts for the middle class and the poor”, is simply the easiest way to accomplish as much of the ending of the Bush tax cuts as the President will allow us to accomplish anyway. And consider: if the Republican Congress continues to obstruct this President’s positive policies as much as they have demonstrated so far, this might be a reasonable way to actually accomplish ending all of the Bush tax cuts, since the cuts will actually have expired in this scenario and the President/Democratic Senate probably won’t be able to re-implement the tax cuts on the lower pay levels by themselves.
The simple thing to do is let the tax cuts expire–period. Let the Congress bring its proposals for overhauling the tax code after the first of the year when they get around to it. Obstructing everything the President wants to do is hard work. The House majority can well afford to go easy on its members. After all, they aren’t there to actually do anything. Rather the reverse is true and will remain so for at least two more years. NancyO
Hugh Caley
what you say is undoubtedly true.
nevertheless it is not good for our side to be calling for tax cuts for us and tax raises for “the rich.”
the President will do what the President will do, whatever I advise, but it seems kind of silly for me to just agree with him before the fact because that’s what he’s going to do.
as for the President’s reasons, I do not trust him. he is on record as wanting to cut Social Security, not slash, of course, just a thousand cuts that will make SS worthless as insurance.
if he is going to raise taxes on the rich and cut Social Security in return, that is a very, very bad bargain for workers.
note that SS has nothing to do with taxes on the rich. this is a question of getting them to take some temporary pain and making them feel better by giving workers pain that will hurt them badly when they can least deal with it. it’s not an economic exchange, but an offer to hurt folks who have nothing to do with the problem in order to give the people who hate the poor the thrill of causing them pain. or maybe it’s just a kind of political deal… you hurt my constituents so i get to hurt yours.
Coberly: I agree that the President does not seem trustworthy about SS. That is why Linda’s idea seems like a better idea to me than going along with any kind of “grand bargain”; I think the President will have a harder time getting tax cuts reinstated by themselves without them being part of some kind of tit for tat, tax increases along with “entitlement” cuts deal.
Believe me, Coberly, I have sent multiple emails to the White House and to my Congresspeople asking them to stop with the the “the people need these tax cuts!” stuff and just allow the Bush cuts to expire. I don’t personally know anyone, whatever the pay scale, who was talking about needing a tax cut, either before or after Bush. I really can’t understand why the President is so intent on keeping them. I’m having a hard time believing it’s only some kind of pandering at this point. Perhaps it’s some misguided way to deal with wage disparity.