What the "Fiscal Cliff Deal" Really Means

Submitted by kvaughn on Tue, 01/01/2013 - 15:36

 As I promised, I am restarting my blog with the new year; and as I suspected, my first post will be about how incompetent the Republicans in Congress are. It has now reached a point that one must wonder if they are trying to destroy the Republican Party. Let me describe the failures and what this really means.

The Republicans Took Us over the Cliff

While both parties have some responsibility the Republicans share most of the blame here. Both parties made the debate about whether taxes would increase - a debate that the Republicans had no real chance of winning. Ultimately, taxes were bound to go up - but by waiting until Januay to get an agreement, Obama can now blame the coming financial downturn on the Republicans for creating so much market anxiety. Had the Republicans made a deal earlier or had they stood by principles, they could have defended their actions; instead, they spent a huge amount of political capital in exchange for blame.

The Republicans Have Forgotten Conservative Principles

Unfortunatley, too much of the Republican Party has been brainwashed by Grover Norquist. The Fiscal Cliff debate focused entirely on taxes rather than on fiscal responsibility. Fiscal responsibility demands shared sacrifice - IF we raise taxes, they should be raised on everyone, just as they were lowered on everyone with the Bush tax cuts. Instead, the Republicans bought into Obama's class warfare argument that the rich should pay more and simply debated who should be considered "rich" and how much more they should pay. And to put this in perspective, this concession was made despite the fact that 50% of the country does not pay any net income tax.

BTW: Payroll taxes are not truely taxes for the operation of government; they represent retirement insurance programs. Every contributor receives a direct benefit for their contributions. General operation of government, on the other hand, is covered primarily by the income tax. Everyone should be contributing some amount to the general operation of government.

The Republicans had the winning hand. By default we would have reverted to the Clinton tax rates. While I am not a fan of the Clinton tax policy, reverting back to those rates would have at least meant greater revenues  (more fiscally responsible) and the Democrats would have had difficulty in blaming the Republicans for the resulting recession (i.e., Clinton had a good economy with those rates and with much lower spending.)

In fact, I would have supported any tax policy of the last 30 years in preference to what the Republicans agreed to; because what they agreed to was class warfare.

Republicans Forgot about Spending Cuts

The Republicans also stopped the sequestration that they had fought so hard for before (and less face it $100 billion a year in spending cuts when we have a $1 trillion deficit is a small fraction of what is needed.)  They claim that these cuts will occur in March, but it is clear that there are already plans afoot to avert those cuts. As a result, the final deal was devoid of any real spending cuts. In fact, the deal actually increases spending by $50 billion this year and $330 billion over the next decade. Shameful! 

This is the most egregious part of the entire deal. Obama was reelected in part based on his suggestion of $3 of spending cuts for every $1 of increased revenue. Republicans should have held him to this promise. Going over the cliff would have been much better than increased spending.

In Summary

Not only did the Republican leadership concede the class warfare argument, but they also allowed increased spending and waited to the last second (and beyond) to consider any deal - thereby allowing themselves to be blamed for the bad economy (which will make real economic reform even more difficult). It would have been better to go over the Fiscal Cliff than accept this deal. It would have been better to bring Obama's plan to the House floor (I'm sure there would have been 17 Republicans willing to show their real colors had they been allowed to) so that we could show that we were fair while also demonstrating how awful his policies were. In short, the deal that was passed is about the worst case scenario - but unfortunately, that is what I have come to expect from the Republicans in Congress.

2014 is a long way off, but if the Republicans refuse to support conservative values, it is hard to find a reason to vote for any of them. With that said, it is worth noting the following for their willingness to vote against this awful deal:

  • Grassley (R-IA)
  • Lee (R-UT)
  • Paul (R-KY)
  • Rubio (R-FL)
  • Shelby (R-AL)

In addition, DeMint (R-SC) and Kirk (R-IL) did not vote for some reason; it is unclear why.