|We can only hope. Source.|
As I said more than a year ago (and continue to believe), going over the fiscal cliff isn't such a bad thing, especially when compared with the likely "compromises" offered by Republicans.
As I said a few days ago, the much bigger threat is the economic terrorism that the Republicans are currently threatening the country with - i.e. refusing to raise the debt ceiling.
Obviously, all of this has been on my mind a good deal in the past couple of weeks, so I figured I'd gather a few of my thoughts together to explain why I think we should (and probably will) go over the fiscal cliff:
- Most importantly, the Republicans haven't offered anything that is even a remotely better option than going over the fiscal cliff, from my (and, I hope, Obama's) perspective. The most I've heard them grumble about is giving a couple of percentage points on tax rates for the wealthy, and in return demanding ridiculous cuts to Medicare, Social Security, etc. etc. Why in God's name would Obama agree to any of that, when he can just wait until Jan. 1 and get higher tax rates on the wealthy without giving up anything in return? And on Jan. 1, he can immediately turn around and demand tax cuts for the middle class, which the Republicans will be in absolutely no position to resist.
- I don't see the Republicans being willing to offer enough to make a deal better for the Democrats than going over the fiscal cliff. I think the spending cuts in the fiscal cliff - to defense, to Medicare providers, and across the government - are actually spending cuts that many Democrats aren't terribly sad to make. Anything the Republicans offer is probably likely to be even more distasteful than the cuts in the fiscal cliff.
- In fact, the only thing I can think of that might possibly make me willing to agree to a deal before Jan 1 (if I were Obama) would be to permanently repeal the debt ceiling, which I doubt the Republicans will agree too, since they are intent to use the debt ceiling as a weapon of economic terrorism to push through their unpopular policies against the will of the American people. It's a powerful weapon (even if it does show that they're not fit to govern), and they'll be loathe to give up such a powerful weapon.
- If Obama strikes any kind of fiscal cliff deal that DOESN'T include a permanent solution to the debt ceiling, he's a terrible negotiator, and I'd question his fitness to conduct foreign policy, as such a terrible negotiator.
- Not only are we going to go over the fiscal cliff, but we may also have the mother of all government shutdowns in February or March, if we don't have a resolution to the debt ceiling and if the Obama Administration proves too chicken to ignore the debt ceiling altogether (which would be my approach, but thankfully, I'm not the President).
- If we reach the debt ceiling without the Republicans giving in and without Obama being willing to ignore the debt ceiling, the stock market will crash, the financial system will melt down, and it will be September 2008 all over again.
For more thoughts on why Obama must go over the fiscal cliff to save his second term, check out this rather insightful article from TNR.
I've also been having some fun thinking about what 30-40% of the federal government Obama would/should shut down, if Obama decides to shut down large parts of the federal government when we reach the debt ceiling. There are two tracks Obama could take - (1) try to minimize the disruption to U.S. citizens' lives, at least the short term, or (2) maximize the disruption to U.S. citizens' lives, to put as much pressure as possible on Congress. Since the former is rather boring, I've mainly been thinking about the latter:
- Shut down the entire U.S. military!
- Stop sending out Social Security checks!
If we reach the debt ceiling, the Obama Administration will have lots of latitude as to WHICH parts of government they shut down - even though they won't, it's fun to think about the possibility of the Obama Administration doing something as extreme as shutting down the whole U.S. military and stopping Social Security and telling people to call Congress if they have a problem with that.
Perhaps the Republicans should be a little more careful with the debt ceiling - they are definitely playing with fire, gasoline, and a bazooka.