This US Government is staging another legislated crisis to close out the year. This year’s version is negotiations over the “fiscal cliff,” a combination of expiring tax breaks and across-the-board automatic spending cuts. President Obama has promised a “balanced” approach to the negotiations and our fiscal crisis in general. But, if you listen to all the talk around the “cliff” and the media’s coverage of it, ALL the discussions are on the tax side of the equation. The GOP has already ceded that the government needs new revenue before getting anything more than pablum on the spending side of the equation.
Negotiations over the “cliff”, and media panels analyzing these, usually begin with everyone acknowledging that government needs to get spending under control and then proceed to very detailed discussions about how much new revenue we should raise. The discussion is then consumed with which rates to raise and which “loopholes” and deductions should be closed. Should we cap deductions on all taxpayers or just on upper-income taxpayers? What do we do about the mortgage interest or charitable deductions? On and on, until the discussion wraps up with final observation that we need to get spending under control.
If the discussions over the “cliff” aren’t balanced, how will the outcome be? There is only so much oxygen in the air in DC. If it is all spent debating the revenue side, there will be almost no will to then have serious negotiations on cutting spending. A week or two after the Thanksgiving break, the media will become bored with the whole thing and start demanding that the GOP just go ahead and cave already. They will paint the GOP as holding the public “hostage” over its tax stance. A deal will be rushed through with higher taxes, which are very real, and a cobbling of future spending cuts, which aren’t real.
The GOP’s real problem is that it still doesn’t understand the media and political environment around it. No doubt, GOP Leaders believed if they entered negotiations and immediately said the government needs more revenue, they would be painted as willing to compromise in “good faith.” They probably believed that this would allow them to begin earnest discussion over real spending cuts or entitlement reform.
The Democrats and media instead took the GOP’s offer and raised their bet on revenue. The GOP’s opening gambit simply allowed the negotiations, and the attendant media coverage, to focus exclusively on raising taxes.
The GOP got punked.