The View from the Cliff

by Harvey Asher, Ph.D. on December 27, 2012


constitutionThe current Congress cannot reach a broad, reasonable agreement – a combination of tax increases and entitlement cuts — to avoid the so-called fiscal cliff for reasons built into American political system, namely the ability of an intransigent minority or individual Senator to torpedo sensible or essential legislation.

When the two major parties deeply disagree and neither holds a majority in both houses of Congress, there is little the president can do to persuade political opponents to support his policies on high profile matters, especially if they’re the very same policies representatives ran against to get elected.  Republicans remain acutely aware of what can happen when they renege on pledges as did George H.W.Bush on his campaign centerpiece: “Read my lips, no new taxes.”

The present situation is further exacerbated by Republican diehards in the House whose districts were redrawn to assure their perpetuity in office, thus giving them no incentive to compromise. They also have the power to inflict political damage on fellow Republicans who don’t tow the line.

Do these dynamics guarantee our fall from the fiscal cliff come January 1?  They do not. Here are two alternative scenarios:

1.       A Senate-sponsored partial deal that shields most Americans (those with incomes under $250,000?) from tax hikes while again kicking the can down the road on spending cuts.

2.      John Boehner – hardly a profile in courage to date, and whose speakership may be in jeopardy — allows the House to vote on a plan whereby enough Democrats  vote with so-called establishment Republicans to obtain the 217 votes needed for passage.  For the odds on this option working, see the December 21 New York Times article by Nate Silver, “In the House of Representatives, An Arithmetic Problem.”

The first scenario is the more likely of the two.  Its success would also depend on President Obama bringing those already predisposed to support him across the finish line by persuasion, bargaining, and arm twisting as he did in obtaining passage of his Health Care Plan in March, 2010. After a bitter and lengthy fight, the president won over Liberal Democrats and “Blue Dog” Democrats, fiscal conservatives who objected to the high cost and wanted reassurance no federal monies would find their way into abortion-providing clinics for a 219-212 margin in the House. (Of course, this was before the Republican landslide in the 2010 mid-term elections and before the recapturing of some of that lost ground by the Democrats in 2012 contests.)

If neither path is taken before the January 1 deadline, what then? The likely answer is one of them will be implemented soon after the country begins its descent from the cliff, but only after both parties have had a chance to blame the other for the impasse. The wrath of angry constituents faced with a significant decline in their take home pay will put the ball in play once more.

Republicans initially will bear the greater brunt of public hostility because they will be seen as the group that screwed tens of millions of average Americans so that millionaires could continue to pay lower taxes. If the standstill persists long term, however, Obama will receive the blame for failing in his role as president to bring the parties together.

The most despicable part of the current imbroglio is the unnecessary suffering and anxiety imposed on the public by a dogmatic minority in the ranks of the GOP. This is a group for whom Ronald Reagan holds no place of honor.  While he did slice the maximum tax rate from 70% to 50% in 1981, a year later he agreed to a three year package that resulted in $98 billion in higher revenues (some of which came from slightly raised taxes), but only $17 billion in spending cuts.

There is a cautionary tale for House reactionaries and the rest of us to be found in the policies of Calvin Coolidge and his Secretary of the Treasury, Andrew Mellon, who worked very hard to lower expectations of government spending and to roll back the progressive tax policies of the Wilson years. The Wall Street Journal observed with delight in 1925: “Never before, here or anywhere else, has a government been so completely fused with business.”  Four years later, the market crashed.

Harvey Asher

After receiving his doctorate from Indiana University, Harvey Asher taught a variety of courses in history and interdisciplinary studies for thirty-five years at Drury University, a liberal arts school in Springfield, Missouri. His articles on themes in Russian history, American history, and the Holocaust have appeared in the Russian Review, Kritika, the Journal of Genocide Research, the Russian Dictionary, the SHARF Newsletter, Federalism in America: An Encyclopedia, and Lessons and Legacies of the Holocaust. He is also the author of The Drury Story Continues, an informal but thorough history of the school.

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