Wednesday, January 2, 2013

How Many More Cliffs?

Once again our "post-partisan" President may have snatched an at least partial long-term defeat out of the jaws of victory. Instead of sticking with the demand that marginal tax rates return totheir pre-2001 levels on all incomes over $250,000 - the position he campaigned on and what the American people elected him to do - he caved in to the hyped-up myth that the "fiscal cliff" needed to be averted at all costs, even at the cost of allowing the rich to get away with lower taxes. Of course, everyone makes promises which cannot quite be fulfilled, and compromises are necessary and legitimate. The problem is that the media-induced national obsession with not going "over the cliff" on January 1, led to a deal which will in the end produce less revenue than is actually needed to run the kind of government American needs and the voters elected the President to facilitate. Since the Washington elite's obsession with the deficit (as opposed to, say, unemployment - an issue we heard a lot about in the campaign, but which has since been largely forgotten) is certain to continue, the pressure will remain strong to reduce more spending on important programs to compensate for the revenue lost by not rasing more taxes.
Actually the more just outcome might have been simply to go "over the cliff" and let all taxes rise to pre-Bush levels. I understand the argument that taking such a bite out of people's incomes all at once might have imperilled the current recovery, and I think the idea of exempting those who need the money most (and also are most likely to spend it in the economy) makes obvious sense. To reduce the shock to the economy, certainly the marginal rates could have been raised on an even more graduated scale in the middle at at the lower ends - and also phased in much more gradually than the rates at the extreme upper end.
Anyway, practically the only leverage the President now has left is that, if the draconian domestic spending cuts go into effect on the new "cliff" deadline, so will defense cuts, which the opposition is less happy about. But, of course, the President is probably not happy about them either. So the absurd disposition to be "post-partisan" will play a part again as we play out another drama leading up to the next artificial deadline in  just another couple of months. At least the Mayan calendar sent the media into a frenzy only once in so many centuries. This silly operetta will undoubtedly continue over and over - until and unless we get over our addiciton to the false excitement of deadlines and demand real substantive progress.

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