[Newsbot]

Filibuster Cartoons
Title: Negotiating til the end (click to view)
Date: December 29, 2012
With only a couple dozen hours remaining until Fiscal Cliff Doomsday, it's obviously very difficult to write anything definitive about the state of the negotiations — other than that they're in their extraordinarily frantic, last-minute phase.

Yesterday, President Obama and the four party heads of Congress — the two minority leaders, Speaker Boehner and Senate boss Harry Reid — had yet one more unsuccessful meeting at the White House. There were lots of big smiles but still "no concrete proposal" for a deal, in the words of Senator Reid.

It's all a little surprising. Last time we checked in on the cliff talks, I was largely of the belief — encouraged by certain cocksure inside-the-beltway reporters, I will note — that much of the Washington intransigence over how to prevent the scheduled January 1 expiration of the George W. Bush-era tax cuts and so-called automatic "sequestration" spending cuts was just a lot of partisan theatrics masking a growing behind-the-scenes consensus.

We now that the theatrics weren't really masking much of anything. After the bilateral Boehner-Obama talks broke down last Wednesday following a prolonged impasse over how rich someone had to be to deserve a tax hike, Boehner moved ahead with a so-called "Plan B" unilateral scheme of his own.

A million dollars, that's the answer said the Speaker; we will raise taxes on millionaires but everyone else gets to keep their Bush-cuts. Also I'll just ratchet up the cuts to Medicaid and food stamps so we can avoid all those nasty sequestration cuts to defense, too.

But while you can bring a Republican House to a tax hike, you can't make him vote for it. After airing plan B with his caucus, Boehner was forced to grimly concede on Thursday that he simply "didn't have the votes" to get it passed. Though they only comprise a minority faction, there are apparently still enough  no-taxes-hikes-for-anyone-under-any-circumstances Tea Party types in the House GOP to make even a literal millionaires' tax a non-starter.

Sure, theoretically, Boehner could have just turned around and said, fine, so we'll get a couple Democrats to pick up the slack, but a) Democrats obviously wouldn't support a plan that's so weak on tax hikes and so vicious on social spending, and b) Boehner is up for re-election as Speaker in a couple days and the last thing he needs is a reputation as a sell-out. I mean, merely proposing Plan B was risky enough with so many humorless tax purists in his midst.

So, lacking a bipartisan deal to rush through a divided government America must be doomed, right?

Perhaps not. As D-Day (FC-Day?) edges closer, it's actually becoming increasingly popular to recast the whole Fiscal Cliff thing as a bit of a non-event. Basically the Y2K of 2012, said David Frum — at least in hype-to-effect ratio.

Precious little in the world of government ever happens literally overnight, after all. Even if we say that a massive federal tax hike will "take effect" on January 1, we all know in reality that this will affect almost no one in the short term, as it's not like Americans pay all of their income tax in one giant lump sum promptly on January 2. Federal budget cuts to defense or Medicare or whatever that immediately "take effect" likewise require many months (or years) of percolating through many layers of affected bureaucracy, and it could be years before the public feels the full brunt of observably weakened federal programs.

In other words, once we get over our hysterical obsession with arbitrary deadlines, it becomes fairly clear that the commonsense realities of 21st century governance afford the politicians plenty of time to work out a deal even after New Year's. With the public largely protected from immediate hurt, the most dramatic consequences — from the market or whatever — will be mostly a reaction to optics, not results, just the current mad drive for "a deal" is more about appearance than action.

The Y2K thesis is getting so popular, in fact, that many Democrats have started to openly contemplate the possibility that they might actually be in a strategically stronger position post Jan. 1 than pre, with their legislative goals far easier to achieve once the nation is completely over the cliff, as opposed to  tottering uselessly on the brink.

Think about it: the scheduled expiration of the Bush tax cuts will generate automatic tax hikes for everyone, and spending cuts for everything else. Since America seems unanimous that these are objectively Bad Things and since acts of Congress are not etched in steel, the obvious response is for the Dems to immediately sweep in with corrective action, and swiftly fix both problems on their own terms. It's sort of a variation on that old trope about how it's easier to "ask for forgiveness than seek permission;" from a Democratic perspective it may be vastly easier to modify bad legislation than prevent it from arriving in the first place.

After January 1, Democrats could quickly cut taxes for middle class families but not those for incomes over $400,000, or whatever their current standard of "wealthy" is. In functional terms, this is exactly the same as preserving the Bush tax rates for the majority and eliminating them for the wealthy, but through the magic of post-cliff semantics, it suddenly comes off as much less socialistically vindictive. Heck, Republicans might even be cool with it.

The sequestration spending cuts, likewise, can be easily compromised in a similar pick-and-choose manner. Perhaps the defense cuts will stay, but Medicare funding will be hiked back up. If the Dems are smart, they could probably even maintain sequestration's $1.2 trillion figure as the total sum of all cuts, while also readjusting budgetary priorities towards things they care about, and away from things they don't. The GOP might not be down for giving formal assent to pruning the Pentagon, but their thinking might change if the debate is framed around some take-or-leave-it proposal to "restore Medicare" — which, as we all know, is inexplicably popular even in Tea Party circles.

Lo, what difference a couple days can make. Suddenly a debate over tax hikes becomes a discussion over tax cuts; threats to cut social programs become proposals to protect them.

'Course, with a couple hours still to go, this is all quite premature. Perhaps Speaker Boehner will revive and water down Plan B at the eleventh hour, grab a few Democrats, and ram something through Congress that the President can sign a few seconds before the big ball drops on Times Square.

Sure, he might lose his speakership in the aftermath, but if the Fiscal Cliff is a true harbinger of fiscal Armageddon, surly that's a small price to pay for the survival of the national economy. But if it's just an arbitrary, overrated, meaningless line of tape on the great stage of Washington theatrics — well, why bother?

Well get our answer shortly.

[DrCaleb]

I think they are all calling it a 'cliff' for it's scary forboding sound.

It's not a cliff. It's a litle steeper incline on the uphill we are traveling.

[Gunnair]

DrCaleb wrote:

I think they are all calling it a 'cliff' for it's scary forboding sound.

It's not a cliff. It's a litle steeper incline on the uphill we are traveling.

... or the downhill they are going.

[Brenda]

We're falling, we're falling!
Grab a damned parachute.

[Murray_Smith]

Newsbot wrote:

'Course, with a couple hours still to go, this is all quite premature. Perhaps Speaker Boehner will revive and water down Plan B at the eleventh hour, grab a few Democrats, and ram something through Congress that the President can sign a few seconds before the big ball drops on Times Square.

Sure, he might lose his speakership in the aftermath, but if the Fiscal Cliff is a true harbinger of fiscal Armageddon, surly that's a small price to pay for the survival of the national economy. But if it's just an arbitrary, overrated, meaningless line of tape on the great stage of Washington theatrics — well, why bother?

This is based on the flawed assumption that the Republican elite doesn't put party interests before national interests.

[Quantum_Wizard]

This kind of stalemate is rather disappointing. I don't know which party is more to blame, but both must bear some of it.

I wonder what will happen when the debt ceiling becomes an issue once again.

[Teikiatsu]

It's all a show, lots of kabuki theatre and finger pointing. Going off the cliff was never the threat, going further into debt is. More water poured by tax/borrow&spend Dems into the economic engine.

The debt ceiling is the only leverage the Republicans have left to force some sanity and fiscal responsibility, but I don't think they have it in them to make such unpopular choices. The media might say something mean about them.

[Quantum_Wizard]

Teikiatsu wrote:

Going off the cliff was never the threat

Do you mean that going off the cliff was unlikely or that going off the cliff is not as harmful as e.g. Bernanke says? If the latter, I would be interested to know your reasons for believing that.

Edit: Missing 'not' added.

[Murray_Smith]

Teikiatsu wrote:

It's all a show, lots of kabuki theatre and finger pointing. Going off the cliff was never the threat, going further into debt is. More water poured by tax/borrow&spend Dems into the economic engine.

The U.S. has a transfinite amount of money. Any debt it has can always be paid off, because unlike a household, a corporation, the State of California, or the Hellenic Republic (Greece), the United States is allowed to print its own money. In fact, most of these shenanigans could have been avoided had we simply minted a $2 trillion platinum coin.

Teikiatsu wrote:

The debt ceiling is the only leverage the Republicans have left to force some sanity and fiscal responsibility, but I don't think they have it in them to make such unpopular choices. The media might say something mean about them.

The debt ceiling was a little more than a procedural vote before the economic know-nothings in the Tea Party took office in 2011.



Also, the liberal media is obsessed, first and foremost, with not looking biased, and will bend over backwards to give both sides of a story "fair" time, even if one of those sides (e.g. vaccines, like, totally cause autism, guys) is plainly misinformed.

[Quantum_Wizard]

Murray_Smith wrote:

The U.S. has a transfinite amount of money. Any debt it has can always be paid off, because unlike a household, a corporation, the State of California, or the Hellenic Republic (Greece), the United States is allowed to print its own money.

Certainly, since US borrows in its own currency, it can always inflate away the value of its debt rather than do a straight default, if it ever comes to that. But the high inflation this requires is certainly not a painless experience. It might be less painful than a default or it might not.

Murray_Smith wrote:

In fact, most of these shenanigans could have been avoided had we simply minted a $2 trillion platinum coin.

Generally if government debt is financed by money creation, very high inflation will result.

[Zipperfish]

Murray_Smith wrote:

Also, the liberal media is obsessed, first and foremost, with not looking biased, and will bend over backwards to give both sides of a story "fair" time, even if one of those sides (e.g. vaccines, like, totally cause autism, guys) is plainly misinformed.

You posit a liberal media, yet offer no supporting evidence, therefore I'll have to take that merely as a matter of opinion. Is it possible that, since you are clearly to the right of the plitical spectrum, that your own views colour what you consider biased or unbviased. For a right wing person, even a perfectly objective story (were there such a thing) would seem slanted left.

[Thanos]

I like how the tax & spend Democrats are cosmically more at fault for all of this stupidity than the oh-so-responsible borrow & spend Republicans ever were.

[Murray_Smith]

Zipperfish wrote:

Murray_Smith wrote:

Also, the liberal media is obsessed, first and foremost, with not looking biased, and will bend over backwards to give both sides of a story "fair" time, even if one of those sides (e.g. vaccines, like, totally cause autism, guys) is plainly misinformed.

You posit a liberal media, yet offer no supporting evidence, therefore I'll have to take that merely as a matter of opinion. Is it possible that, since you are clearly to the right of the political spectrum, that your own views colour what you consider biased or unbiased. For a right wing person, even a perfectly objective story (were there such a thing) would seem slanted left.

My honest opinion is that the concept of cause and effect has a liberal bias, insofar as it doesn't work the way modern Republicans want it to. If the media reports on a reality that favors one party over the other, the illusion of media bias is created.

I may be right-of-center in Canuckistan, but I am decidedly left-wing with a rabid pro-SCIENCE! bias in the U.S. I bash the left sometimes because familiarity breeds contempt.

[Quantum_Wizard]

Quantum_Wizard wrote:

Murray_Smith wrote:

In fact, most of these shenanigans could have been avoided had we simply minted a $2 trillion platinum coin.

Generally if government debt is financed by money creation, very high inflation will result.

Actually I may have misunderstood you. I read Krugman's post about this and the idea apparently was not to put this coin in circulation but to deposit it in the Fed.

This kind of trick would have no actual bad effects since it's really nothing but an accounting gimmick. But this kind of trickery is rather unsatisfactory in my opinion. I don't like the idea that the executive could just bypass the legislature through a loophole like this even if the legislature is being dysfunctional.

This reminds me of the idea that Ron Paul had last time when the debt ceiling was an issue. His idea was for the Congress to order the Fed to destroy the bonds they hold. This is also just an accounting gimmick except that it makes even less sense. If the Congress could agree to order the Fed to do this it should also be able to agree to raise the ceiling since there would be no real difference.

[Zipperfish]

Murray_Smith wrote:

Zipperfish wrote:

Murray_Smith wrote:

Also, the liberal media is obsessed, first and foremost, with not looking biased, and will bend over backwards to give both sides of a story "fair" time, even if one of those sides (e.g. vaccines, like, totally cause autism, guys) is plainly misinformed.

You posit a liberal media, yet offer no supporting evidence, therefore I'll have to take that merely as a matter of opinion. Is it possible that, since you are clearly to the right of the political spectrum, that your own views colour what you consider biased or unbiased. For a right wing person, even a perfectly objective story (were there such a thing) would seem slanted left.

My honest opinion is that the concept of cause and effect has a liberal bias, insofar as it doesn't work the way modern Republicans want it to. If the media reports on a reality that favors one party over the other, the illusion of media bias is created.

I may be right-of-center in Canuckistan, but I am decidedly left-wing with a rabid pro-SCIENCE! bias in the U.S. I bash the left sometimes because familiarity breeds contempt.

From muy point of view--kind of left-centrist by Canadian standards, I just don;t see this liberal bias, and find argument that rely on that argument to be unsupported.

I note, in the US, that FOX News is the top-rated cable news network and that most of the top ten radio shows are conservative talk shows (Rush Limbaugh, Sean Hannity, Glenn Beck)..