Op-Ed Columnist
Strangers in the Night
Published: December 20, 2012
It’s always amazing how little Democrats and Republicans know about each
other. Democrats, for example, are mystified that we haven’t already
gotten a deal on the “fiscal cliff.” On Monday, the two sides seemed
close. Both made serious counteroffers, and a deal seemed a day away.
Josh Haner/The New York Times
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Then Speaker John Boehner pulled back. He did this because senior
Republicans were afraid that he was giving away the concessions they
would need in a future tax-reform negotiation — like closing tax
loopholes.
But Democrats don’t know this. They have no clue what Republicans are
thinking at any moment. Republicans are equally in the dark. The White
House is a black box to them. They have no clue what President Obama
wants in his second term or how the fiscal-cliff negotiations fit in.
Well, I’d like to help the Republicans understand what’s going on in the
other camp. First, Republicans should understand the mood in the White
House. A month ago, the president and his team were gearing up for a
fight. They were belligerent and tough-talking. Now, their mood is one
of deep confidence. They’ve had a good month. The business community is
on their side. Public opinion is breaking their way. Republicans are
disorganized. The Obama folks project the self-assurance of a Duke
basketball team warming up against a Division III school.
Second, Republicans should understand Obama’s incentive structure. He’s
trying to map out his whole second term and write an Inaugural Address
that will prefigure it. He wants to accomplish some big things: his
middle-class economic agenda, immigration reform, a global warming
agenda and government reform.
He cannot have a satisfying second term if the next four years look like
the last two, with a string of debt-ceiling-type budget showdowns. If
Obama’s going to govern the way he wants, he absolutely has to crush the
Republicans on the debt-ceiling threat and on tax rates.
He’s going to be willing to fight tooth and nail to put the
budget-showdown-era behind us. He simply has to win this. He’s going to
be willing to go over the fiscal cliff and blame it on Republicans.
Given the weak Republican position, he’s going to conclude that his
current offer is roughly the best he has to do. He’s just going to sit
there, through hell and high water, and wait for Republicans to come to
him. And since he’s sensitive to the liberal criticism that he’s a soft
negotiator, he’ll love the chance to be implacable.
So over the whole span of his presidency, this is the moment when Obama is going to feel the least need to give ground.
But down the road, Obama does have a problem and, for Republicans, a
vulnerability. Even if the cliff talks go his way, Obama will still face
a money shortage. Entitlement costs are rising. Revenues can’t keep up.
This squeezes the share of federal revenue that can be devoted to
domestic discretionary programs — stuff like education, welfare,
infrastructure, etc. As
Eduardo Porter noted in an Economic Scene column
in The Times, discretionary spending, which usually hovers around 3
percent or 4 percent of G.D.P., is scheduled to shrink to a paltry 1.7
percent in 10 years. That’s roughly the level envisioned in
Representative Paul Ryan’s budget.
In other words, even if Obama gets a fiscal-cliff deal, he still needs
to shake loose some money — either from the entitlement programs or from
a new revenue stream — to pay for his programs. He is still caught in
the remorseless vice that Christopher DeMuth describes in, “
The Real Cliff,”
a brilliant piece in The Weekly Standard. A generation of debt politics
has left our leaders with no room to maneuver.
That means that in 2013, he will need to do comprehensive tax reform,
find fresh revenue or take a broader whack at entitlements to shift some
of that money to domestic programs.
As invulnerable as Obama is right now, he will be equally vulnerable
next year to get these big projects done. The Republican strategy should
be obvious. Swallow hard and accept a deal. End the showdown era.
Achieve short-term fiscal stability. Don’t give away G.O.P. leverage on
tax reform. Then focus on the bigger fight in 2013.
Don’t get hung up on some incremental tax increase for the rich.
Instead, make sure America doesn’t have another credit downgrade. Make
sure the economy doesn’t fall into another debt-exploding recession.
Prepare a comprehensive tax and entitlement reform strategy for 2013.
Call Obama’s bluff on health care reform. In case Obamacare doesn’t bend
the cost curve, get Obama to agree to some automatic triggers — plans
that will kick in and bring down health care spending.
A minority party has to learn how to pick its battles. The White House
has a dominant position on the fiscal cliff and knows it. But next year
Republicans can do big things.
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I agree about the confusion between the Republicans and the Democrats. However, as we appear to be going over the fiscal Cliff, Republicans likely are going to fragment even more as they are blamed for the debacle by the American People. I wonder if the party will just fragment out of existence from their ultimate wrath from the public's suffering or whether the cliff will just start a second Great Depression and end the party that way?
Any way you look at it we may be viewing the end of a two party system and on our way to something else. It is like watching the whole Republican Party "Jump Off" the Fiscal Cliff to it's permanent suicide.
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