Merry Christmas, Your Taxes Are Going Up

Photograph by Win McNamee/Getty Images

Speaker of the House John Boehner (R-OH) departs a press conference with House Majority Leader Eric Cantor (R-VA) at the U.S. Capitol on Dec. 21

Congress

Merry Christmas, Your Taxes Are Going Up

Posted by: Joshua Green on December 26, 2012

Congress Fiscal Cliff House Republicans John Boehner President Obama tax rates taxes

With five days to go until the fiscal cliff, Republicans and Democrats are displaying as much effort as New York Jets quarterback Mark Sanchez in the latter stages of a typical four-interception blowout—which is to say, none whatsoever. They can barely bestir themselves to maintain the pretense that they’re working to avoid the $600 billion of tax hikes and spending cuts due to arrive next week.

President Obama is flying back from Hawaii tonight to keep up appearances. But almost nobody expects a deal before Jan. 1. Negotiations essentially ended after John Boehner’s Plan B fell apart last week. As the Wall Street Journal put it this morning, “the parties are engaged in a political staring contest.” Sounds productive.
One reason nothing is happening could be that, at this point, both parties secretly want to go over the cliff. As the political scientist Jonathan Bernstein noted:
[N]ot only do liberals believe that the expiration of Bush-era tax rates gives them a bargaining advantage, but many Republicans may well prefer that outcome as well. I think if there was any information generated by the Plan B fiasco, it might have been just that: some Republicans really would prefer an eventual outcome that involves relatively higher tax rates as long as they don’t have to make an affirmative vote for it.
That strikes me as exactly right, although I’d characterize the Republican motivation slightly differently. I’m not sure how many Republicans actively wish for taxes to go up. But I’m sure they all recognize that taxes will rise on Tuesday, when rates automatically revert to their Clinton-era levels. That’s why Plan B was such a heavy lift: It called on House Republicans to cast a career-threatening vote to raise taxes, when everyone knew full well that such a vote was entirely unnecessary, since the cliff would do the dirty business of raising taxes for them if they just waited a week.
Best of all, once rates reset, Republicans (and Democrats, too) would find themselves in the much more comfortable position of negotiating tax cuts for the vast majority of Americans. Given this reality, the question to ask in the days and hours leading up to the fiscal cliff is not whether the two parties will strike a deal, but why they would want to.

Green is senior national correspondent for Bloomberg Businessweek in Washington. Follow him on Twitter @JoshuaGreen.

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Wednesday, December 26, 2012