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Did The Cliff Hype Drive A Bad Deal?



Cliffs_of_Dover-Michael Rowe wiki

It certainly looks that way.  The most striking thing about the tax hike was the holiday rush. (Of course, that’s how Obamacare made it through the Senate in 2009, on Christmas Eve no less.)

Let’s face it.  The American people voted for a tax hike when they re-elected Barack Obama and gave him a Democratic Senate.  There’s not too much the GOP can do with just one branch of the legislature, especially when the other branch colludes with the White House to wage a classic class warfare campaign, abetted by the usual suspects in the media.  The sequestration strategy depended on a complete GOP victory in 2012.  In retrospect, it would have been better for Speaker Boehner to initiate the showdown in 2011 fresh from the big GOP win in 2010, with an energized base ready to fight on principle. Trying to cut a deal in December 2012, with a fresh Obama win and a demoralized base- you didn’t need a Ouija board to predict how that was going to turn out.

Still, one could have done something.  The media acted as if all hell would break lose at 12:01 AM on New Year’s Day in the absence of a deal.  That was nonense.  People were paid through year-end.  Increased withholding wouldn’t have taken place until the first paychecks of 2013 were cut, and that would have been mid-January for most people.  The government could have muddled through for some days.  Team Boehner could have sunk the McConnell package in the House and used the time to bargain for more spending constraints, making the Democrats sweat for a change and salvaging the Republican brand. Alas, a lost opportunity.

There are silver linings.  The tax hikes are not as bad as those desired by the far left.  Even the Democrats backed away from the ridiculous assertion that an income of $250,000 makes one “rich”.  The estate tax threshold stayed at 5 million instead of dropping to a catastrophic level for small business owners.   The Alternative Minimum Tax threat has been neutralized for the time being.  The tax hike that will hit most Americans is the restoration of two percentage points shaved off the Social Security tax.  Given the wobbly state of Social Security’s long term solvency, that cut was pandering by the political classes at its worst and one should not cry over it. Most important, the combination of higher marginal rates and lower deductions will hit those pricey, affluent blue states the hardest.  There is some justice in this world.

But make no mistake about it-  this deal has damaged the Republican party, and is another indication that leadership changes are imperative in Congress.  The sooner, the better.


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