Economy & Budget

Fiscal cliff update Dec. 6: Purge will continue until morale improves

Fiscal cliff update Dec. 6: Purge will continue until morale improves

With 25 days left in 2012 and House Republicans mired in a controversy over committee leadership posts, several things are becoming clear in the ongoing budget negotiations. The United States will go over the fiscal cliff, or it won’t; Republicans are either in hopeless disarray or increasingly unified; and President Obama has both won a lasting public relations victory is about to get pilloried for tax increases. As the White House pushes its advantages of message control and a unified (though not necessarily wise) budget policy, the GOP remains on the defensive.

House bigwigs: “Team players” only need apply

Reuters’ David Lawder speaks with House Republican leaders who supported this week’s removal of conservatives from key committee positions:

In effect, these congressmen are not “team players” working constructively with committee colleagues and leadership, Representative Pat Tiberi, a close Republican ally of Boehner from his home state of Ohio, told Reuters. Gone are the days when a lawmaker could expect “to stay on a committee forever,” Tiberi said.

“This is not golf. This is baseball. You’re part of a team,” he added.

The move after a November election in which Republicans ceded seats but maintained a majority, signals a stronger hand from Boehner, who took the speaker’s gavel two years ago and has repeatedly struggled to get his caucus behind him….

While Boehner has struggled over the past two years with Tea Party-backed freshmen opposing his most important fiscal initiatives, he now needs to also closely watch the party’s more moderate wing.

A number of lawmakers in recent days have voiced agreement with Representative Tom Cole’s recommendation that Republicans give in to Obama’s demands to let the top two tax rates rise in order to gain more leverage over other areas of the fiscal cliff, including cuts to government health care programs.

Gizzi: Boehner’s leadership in doubt

Human Events’ John Gizzi says comments like Tiberi’s haven’t settled the matter of the conservative purge, which continues to muddy the GOP’s message:

Republican leaders in the House found a “family squabble” becoming a major story overnight. The surprise announcement that four outspoken conservative lawmakers were being removed from key committee assignments raised fresh doubts about the leadership of Boehner and Co. and, in fact, their commitment to conservatism.

Widely dubbed a “purge” and dominating talk radio and cyberspace on Tuesday and Wednesday was the decision of the House Republican Steering Committee to remove the four from their coveted committee posts: Tim Huelskamp (Kan.) from the Agriculture and Budget Committees; Walter Jones (N.C.) and David Schweikert (Ariz.) from the Financial Services Committee; and Justin Amash (Mich.) from Budget. All except ten-termer Jones were first elected in the GOP tide of 2010.

New York Times: No, Boehner’s stronger than ever

The Grey Lady’s Jennifer Steinhauer says non-purged Republicans are showing support for Boehner’s leadership:

On Wednesday, in a private meeting between Mr. Boehner and House Republicans, member after member spoke in support of him, in some cases saying a deal they would have rejected six months ago would most likely be taken today.

“I want to be a strong advocate and say that I am with the speaker,” said Representative Scott Rigell of Virginia, a House freshman. “I am with the leadership.”

Further helping Mr. Boehner, at least for now, is the sense that he is no longer forced to look constantly over his shoulder, fearing a counterproductive move by Representative Eric Cantor of Virginia, the majority leader who has spent much of the past two years quietly maneuvering around Mr. Boehner.

Mr. Cantor signed on this week to Mr. Boehner’s package including $800 billion in new revenue, putting him squarely on the same page with the speaker. Representative Paul D. Ryan of Wisconsin, the chairman of the Budget Committee and recent vice-presidential candidate whom many of the most conservative members look to for cues, also signed on.

WashPost: Republicans are this close to agreement

The Washington Post’s Lori Montgomery and Rosalind S. Helderman quote an influential Republican from Boehner’s own state urging conciliation with the president:

“I and some others are advocating giving the president what he wants,” said Rep. Steven C. LaTourette (R-Ohio). But he stressed that this must be part of a package that slows federal borrowing and reduces the debt by $4 trillion to $5 trillion.

“Quite frankly, some people in this 2 percent who call me, they’re more worried about the fiscal cliff than about the rates going up a couple points. That has bigger risk for them,” said LaTourette, a close Boehner ally who is retiring in January.

Rep. Thomas J. Rooney (R-Fla.) added: “If there are truly real entitlement reforms that are going to preserve Social Security and Medicare for generations to come, it’s going to be very difficult for me to oppose” higher rates for the rich.

Elsewhere in the Post, Dana Milbank says Republicans have “already acquiesced on some form of a tax increase.”

J-Pod: Republican have a bad hand — make that a terrible hand

At the New York Post, John Podhoretz looks at the Republicans and says it’s somewhere between time to fold ‘em and time to run:

Polls say Americans would be twice as likely to blame Republicans as Democrats for the failure to reach a deal. Now more than ever, Republicans should know better than to pretend polls aren’t telling them something.

Here’s the thing: Congress doesn’t do well negotiating with the president in direct public view. He’s big. They’re small. He governs the nation; each member of the House is chosen to represent 1/435th of the country.

Factor in that only 32 percent of voters nationwide described themselves as Republican on Election Day, and you have the very real possibility that the poll numbers are only going to get worse for the GOP as the month of December progresses.

The truth is, every way you look at it, the GOP is trapped.

 WashTimes: No, it’s time to hold ‘em, walk away

But in the Washington Times, Milton R. Wolf says Obama is playing with a marked, and the Republicans would be jokers to keep playing the game:

The Democrats’ long game is to push an ever-increasing tax burden onto fewer and fewer taxpayers. This grows a class of Americans who may or may not earn paychecks but certainly become beneficiaries of government largesse while remaining blissfully detached from its enormous cost. (What’s their fair share?) Economists would call this a recipe for disaster. Democrats would call it a voting base. Weak-kneed Republicans are poised to help them build it.

What will follow is just as predictable: The economy will continue to suffer, the debt will continue to rise, and Democrats will blame Republicans. Why play their game? Republicans must reject compromises that (1) only hope to slow the Democrats’ inexorable march toward statism and (2) absolve Democrats from blame. One Republican vote is all the cover they need.

The Republicans understood this in the run-up to Obamacare. Outnumbered and unable to stop this disaster, they at least were smart enough to stay away from it. They could have “compromised” in hopes of making it slightly less disastrous, but that’s a fool’s errand. Just ask former Rep. Bart Stupak, whose abortion compromise failed to protect the unborn or his job.

Will: Don’t fall into the tax trap

At Human Events, George Will says Republicans and the public have been bewitched by all the revenue talk when in fact it’s spending that has left the federal budget bothered and bewildered:

What is to blame for today’s huge imbalance? The Bush tax cuts? The recession? Obama’s spending? Dorfman answers yes, yes and yes — but he adds that “spending is the main culprit” because: Today federal revenue is $2.67 trillion (slightly less than “the Clinton equivalent”) and spending is $3.76 trillion, so we are spending $987 billion more than we would be if we had just increased Bill Clinton’s last budget for inflation and population growth.

Geithner: Make my day

At National Review, Eliana Johnson catches Obama’s treasury secretary claiming the administration is ready to go over Niagara Falls:

In an interview on CNBC, Geithner was asked, “When it comes to raising taxes on the wealthy, those making more than $250,000, if Republicans do not agree to that, is the administration prepared to go over the fiscal cliff?” ”Oh, absolutely,” Geithner said, maintaining that the administration continues to seek a “balanced” agreement.

This seems to be the clearest indication yet from the Obama administration that it is willing to stomach the tax increases and spending cuts that will become law if the White House and Republicans fail to reach a deal by the end of the year.

Panetta: We’re preparing for cuts

Supporting the notion that the White House is not just ready to go over Niagara Falls but to do it  in the manner Ronald Reagan prescribed — the hard way, upstream — Human Events’ Hope Hodge notes that Defense Secretary Leon Panetta is getting ready for sequestration reductions in baseline spending increases:

On Wednesday afternoon, Pentagon spokesman George Little tweeted, “@DeptofDefense is in consultations with OMB to start internal planning for sequestration–something we strongly hope is avoided ASAP.”

During a press availability at the Pentagon, Little told reporters that DoD was just beginning to work with the Office of Management and Budget to iron out the details of sequestration.

“Naturally, we hope very much that sequestration will be avoided,” he said, according to American Forces Press Service reports. “We don’t want to go off the fiscal cliff.”….

Defense Secretary Leon Panetta has made no secret about his disgust with the sequester mechanism, telling troops it was “stupid” policy and averring this fall that he would accept “whatever the hell” alternative Congress could come up with to avoid it.

Politico: So much for open-door negotiations

Politico’s Jeff Gerstein and Byron Tau note that while some good-government advocates such as Sen. Jeff Sessions (R-Ala.) and Americans for Tax Reform founder Grover Norquist advocate bringing in C-SPAN to make the fiscal cliff talks public, that idea has no chance of happening:

The negotiations on the Hill have taken place in private. Obama has held closed-door sessions with CEOs, union leaders, liberal activists and small business owners. When congressional leaders were invited to the White House, cameras were allowed in for a brief statement — then ushered out. And GOP aides, not White House officials, leaked details of the administration’s opening offer on the fiscal cliff to reporters.

Of course, it’s extremely difficult to reach compromise on major legislation in Washington with cameras present — and pretty tough even when they’re not. Obama has learned that the hard way during his first term. But his 2008 pledge to open up the process — a commitment he repeated in 2010 — has provided a perennial attack line against him whenever there’s a prickly issue that needs to be resolved.

 National Journal: What’s in it for me? 

So if we can’t see the fiscal cliff talks, can we at least get some idea of what’s at stake? National Journal’s Sophie Quinton lays out the consequences of the fiscal cliff for Americans:

The expiration of the Bush-era tax changes would mean higher income taxes, reduced tax benefits for families with children, increased marriage penalties, a higher estate tax, and higher taxes on some investment income. The most pressing Obama-era tax hike would be the expiration of the payroll-tax cut. The payroll-tax cut was always meant to be temporary, but a return to higher Social Security payments would mean less money in everyone’s paychecks.

Other Obama-era tax cuts included in the stimulus package are also expiring, including tax credits for families with children and a credit to help students pay for college. Higher earners would see an additional bump in their income and capital-gains taxes next year because of new taxes included in the 2010 health care. And then there’s the alternative minimum tax, a cumbersome income tax that has to be periodically adjusted to track inflation. If Congress doesn’t do so this year, it could hit individuals making as little as $33,750, raising taxes on millions of Americans.

Spending cuts are the final component. Certain domestic federal programs—but not Medicare or Medicaid—would see reduced funding as a result of spending cuts known as “sequestration.” Funding for unemployment insurance is scheduled to drop, as are Medicare payments to doctors.

Quinton also breaks out the potential impacts for five hypothetical Americans: Banker, Oncologist, Teacher, Millenial and Grandma. And she finds a handy personal tax calculator from the Tax Policy Center.

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