Treasury Secretary Timothy F. Geithner presented the House speaker, John A. Boehner, a detailed proposal on Thursday to avert the year-end fiscal crisis with $1.6 trillion in tax increases over 10 years, $50 billion in immediate stimulus spending, home mortgage refinancing and a permanent end to Congressional control over statutory borrowing limits.
What is magical about this? Note what is missing: spending cuts. Basically, Obama wants $1.6 trillion in new taxes, another $1 trillion in new spending, a permanent lifting of the debt limit (a power no President has ever had)…and says he will promise to cut spending later next year.
Credit Mitch McConnell…he can be a doofus sometimes, but don’t call him stupid. He laughed in Geithner’s face…literally.
I am what many conservatives may call a moderate. I am, reluctantly, willing to give up some tax revenues if we get some real entitlement reform. I think increasing taxes now is terrible fiscal and economic policy, but the American people gave the White House to Mr. Obama, so I live within that reality. But, if we take Obama at his word, we should expect $3-$4 of cuts for every $1 of taxes. That is what he himself promised on the campaign trail, as well as in the Presidential debates against Governor Romney.
This proposal? At best (and this is an actual stretch) he proposes $1 of spending cuts to $4 of tax increases. In other words, exactly the opposite of his prior promise.
Liberals applauded Obama’s courage, taking a stand for grand progressive ideology. That is ludicrous. What Obama did is marginalize the centrists in the Republican party who were willing to at least consider tax revenues, while giving the Right more power to control the debate. In short…Obama overplayed his hand. Obama does have some political capital here, but not as much as liberals would like to think. They have argued that he won a huge mandate on November 6th. And although I am willing to admit he deserves some leeway (one reason I am giving up the huge concession of tax revenues to begin with), defining his electoral victory as a mandate is laughable. And more to the point, delusional.
So what Obama has done is forced the minority party into a corner. What possible reason would Republicans have to talk to Obama about a proposal like this? There frankly is none. Obama seems set not to get a victory for the American economy, which would include some tax increases but also spending and entitlement reform; instead, he seems to be aiming for a short term political victory by blaming Republicans for going over the fiscal cliff. Clearly, this is what will occur; the polls are quite clear on who the public will blame if that eventuality occurs.
For me personally, giving up tax revenues in the debate was for a simple reason: I am deeply concerned about the American economy. Obama is playing not with fire, but with nuclear fissionable material. Our economy is languishing, and has been on the precipice of a recession for well over a year, and if anything things are getting worse. Going over the fiscal cliff could easily push us into a recession.
But Obama simply doesn’t seem to care. His priority is small minded political victories at this moment in time. So I say, lets give it to him.
This ends up to be a simple calculation on my part, that has virtually nothing to do with politics; in fact, if I had political goals in mind, I would completely reverse course and surrender to the Democrats. Is there a compromise that puts American on better footing going forward, looking longterm? Short term, the tax increases will hurt. Liberals can fool themselves all they want, but there is NO economic theory in which raising taxes during a recession helps create jobs. Whether you are from the Austrian School or Keynesian, tax increases during a slow economic period stagnates economic growth.
But long term, if we got some entitlement reform, the tax increases, as painful as they would be, would be worth it. But right now, Obama has only put the pain on the table, and nothing to gain. At which point, why even bother? Democrats’ calculation is that this would be so politically bad for Republicans, they will fold. I say hell with it. If the American people want to follow the path of other failed nations (Greece, Spain, Portugal) by raising taxes and spending with no fiscal reforms whatsoever, let them vote the GOP out in 2014. I would rather go down swinging.
I am not a reactionary at heart. I am pretty down to earth, look for practical solutions, am willing to compromise for the greater good, even at times it pains me to do so. I was not the type that would protest in college, would get all riled up at the simplest insults, would be looking for my next cause to get fired up about. So calling for us to ignore Mr. Obama’s proposal, walk away, and say hell with it? It is not in my nature. But at some point, a line is crossed…and that line seems to be hardening in the sand as I speak. So if liberals really want to follow this path to fiscal ruin, I have only one answer.
Let it burn.
This was cross posted at Neoavatara.