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Massachusetts Liberal

Observations on politics, the media and life in Massachusetts and beyond from the left side of the road.

Saturday, November 10, 2012

Fiscal curb

If nothing is done about the"fiscal cliff" before January, the Bush tax cuts expire and Barack Obama can propose new tax cuts on his terms. Think Republicans will vote no?

For all the GOP bluster about standing firm against higher tax rates for the wealthy is this simple fact: time favors Obama and Democrats, who have until at least February to hold their ground before the only real threat to the nation's economic health looms large. That's when the nation runs smack up against the debt ceiling the GOP has already held hostage once.

This is not a call for obstruction. Rather it is one for hard bargaining which Obama seems ready to finally do now that his last election is behind him:
β€œI just want to point out this was a central question during the election,” he said in brief remarks in the East Room. β€œIt was debated over and over again. And on Tuesday night, we found out that the majority of Americans agree with my approach.” 
While it would be painful for 2013 to dawn with payroll tax cuts restored and higher income tax rates, it is clear long-term higher taxes is in no one's best interests -- starting with the economy. And the cuts contained in the sequester that accompanied the previous debt limit solution are designed to phase in slowly.

More like stepping off a fiscal curb rather than a cliff.

Changes are clearly needed. That includes overhauling a tax structure that favors "job creators" who have been spectacularly unsuccessful in that task despite the favorable treatment they have enjoyed for a dozen years.

And we certainly don't need expensive weapons systems designed for a Soviet nuclear threat that no longer exists. Nor do we need to remain mired in a credit card war in Afghanistan, one of two military excursions launched by supposedly fiscally conservative Republicans.

We certainly don't need to doubly subsidize the oil and natural gas industry with tax subsidies for the companies and their high-priced executives. Ditto for the money "managers" on Wall Street who live the high life on "carried interest" and capital gains tax rates lower than income tax rates on the working and middle class.

And liberals must recognize it also requires changes in a social safety net that was designed in the 1930s and 1960s when people did not live as long as today, in large measure because of expensive medical interventions that were only dreams back then.

Social Security has already begun a gradual pushback of the retirement age. There are efficiencies to be found in the health care system, efficiencies that Obamacare is designed in part to create.

The intransigence of the House Tea Party Caucus was, is and will be the largest stumbling block. John Boehner may find it easier to negotiate with Obama than with the Tea Party, where Eric Cantor may be tempted to continue leading the GOP lemmings over their own cliff.

So be prepared for more bluster, perhaps a new round of television ads from corporations still licking their wounds from backing the wrong guy.

But in the end, Obama holds the winning hand. And as of now, he doesn't seem ready to fold.

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