Monday, December 03, 2012

WSJ: Call Obama's bluff on fiscal cliff

Keith Hennessey, writing for the Wall Street Journal, says it's time to call Obama's bluff on the fiscal cliff negotiations.
• The president's veto threat is a bluff. Without a new law, tax increases and spending cuts will likely increase unemployment to 9% and might trigger a new recession. Even if he could shift all the political blame for such a legislative failure onto congressional Republicans, Mr. Obama cannot afford to risk a new recession that would irreparably damage his second term. He can neither veto a budget-deal bill that Congress sends to him, nor can he allow Senate Majority Leader Harry Reid to tie a bill up in the Senate. He can, however, try to bluff Republicans into giving away the store.

• The president's proposal for more spending and taxation puts him to the left of many in his own party, and Democrats up for re-election are not lemmings looking to follow Sen. Patty Murray, who has welcomed a plunge over the fiscal cliff. Democratic Sens. Max Baucus and Mary Landrieu oppose the president's proposal to increase the estate tax. Sen. Chuck Schumer has defined "rich" at $1 million of income, much higher than the president's $250,000.

Many Democrats don't want to raise taxes on successful small business owners without Republican votes as political cover. Members of both parties are terrified at the prospect of subjecting 27 million additional tax filers to the Alternative Minimum Tax if there is no new legislative "patch," as Congress has annually passed for many years.

If exposed to the light of day, these intraparty Democratic divisions provide opportunities for Republicans to negotiate a centrist or center-right agreement. In the short run, this requires Republicans to publicly challenge their Democratic colleagues on these specific policy questions. In the long run, Republicans must refuse to engage in ad hoc summitry and insist upon a return to a regular, committee-based legislative process that includes annual budget resolutions and open-floor amendments.
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