The single greatest obstacle to a fiscal cliff compromise remains the House GOP’s refusal to agree to a single additional penny generated by higher tax rates on the rich. Even Senate Republicans are increasingly acknowledging this — and the damage it’s doing to the party. Indeed, the Senate GOP is now trying to throw the House GOP a lifeline. But the House GOP is pushing it away.
The Post reports that Senate Republicans are quietly floating a compromise: They would allow tax rates on the rich to go up, while nixing other revenue-raising ideas the White House wants, such as higher rates on investment income and putting limits on itemized deductions. This would lower the revenue price tag on the compromise, supposedly making it easier for Republicans to accept a hike in rates. It would produce $440 billion in new revenues — half of John Boehner’s original $800 billion offer — so it’s hard to see what this would accomplish. But at least Republicans would be giving ground on rates.
House Republicans, the Post reports, promptly shot this down. It’s not hard to see why: As Real Clear Politics put it: “many House conservatives who represent safe GOP districts remain philosophically and politically wary of voting for higher taxes or conceding to Democrats.”
To get a sense of how adamantly House conservatives are opposed to conceding any ground to Dems, check out what one House GOPer had to say about this:
Meanwhile, anti-tax sentiment is so strong in the House that one GOP freshman, Rep. Andy Harris, said he would vote against any tax increase that wasn’t paired with spending cuts at least 10 times as large. And if Obama rejects such a deal? “Then we go over the cliff,” Harris said.
As you may recall, the GOP candidates all pledged to reject even a 10-to-one ratio of spending cuts to tax increases. But this is still kind of amazing: Republicans ran in the last election on a platform hugely tilted towards spending cuts. Republicans, of course, lost that election. Yet here you have a House conservative continuing to insist on an absurdly lopsided imbalance. It’s as if the election never happened.
And indeed, for some conservatives, there’s no need to acknowledge that the election happened. I don’t know if this applies to Rep. Harris, but in a general sense, as I noted here yesterday, many of them retain strong incentives to stand by positions that have been rejected by the broader electorate, thanks to safely drawn districts where voters agree with them, and the prospect of praise from conservative interest groups and right wing media as a reward for any refusal to compromise with Dems. The result: A schism may be developing between Senate and House Republicans, one driven by the plain fact that Senate Republicans are increasingly recognizing reality — tax rates on the rich must go up — and House Republicans aren’t.
Update: I got my history wrong. What actually happened is that all the presidential candidates said they could not even accept a 10-to-one ratio of spending cuts to tax increases. So maybe Rep. Harris is making a big concession by willingly accepting it! (Kidding.) I’ve edited the above to correct.
* Obama unlikely to target state marijuana laws: This is good news: Obama says in an interview with ABC News that it’s unlikely his administration will try to undermine state laws legalizing recreational pot use in Colorado and Washington State, claiming: “We’ve got bigger fish to fry.”
Obama has asked the Justice Department to review the conflict between federal and state laws, but this one looks close to settled. The sight of states legalizing marijuana without Armageddon breaking out could undermine the War on Drugs, which Obama is said to believe is a disastrous failure.
* Dems warn Obama: No hike in the Medicare age! It continues: Senate Dems tell White House adviser Gene Sperling in a closed door meeting that raising the Medicare eligibility age is a nonstarter. However, Dems appear open to means testing, which may be more acceptable to some on the left.
It’s clear the White House has gotten the message that raising the age would spark full scale revolt, and I’m cautiously optimistic that it may not happen. But people should continue voicing opposition until it is officially dead.
* Why conservatives want Obama to offer spending cuts first: Alexis Simendinger and Caitlin Huey-Burns explain it in one sentence:
Conservatives want to hear more specific policy offers from the White House about possible spending reductions because they believe they can make Obama more vulnerable with his base.
And, of course, because they want the White House to take ownership of their deeply unpopular policy goals.
* Immigration reform would create millions of Democratic voters: Keep an eye on this one: Immigration reform could be complicated by a dispute over whether immigrants should be given a path to citizenship, or some legal status short of that. Why the dispute, you ask? Here’s one reason:
Policy aside, some Republicans worry that offering citizenship would create millions of new Democratic voters, said John Feehery, a Republican consultant, who doesn’t subscribe to that view.
I don’t know how widespread this is, but … wow. Republicans should solve their Latino problem by supporting watered down immigration reform while not expanding Latino access to the vote. Yeah, that’ll work!
* Spending cuts hurt the economy: This problem generally doesn’t get the attention it deserves, but state officials are expressing a fresh round of worry that federal spending cuts in the name of deficit reduction will reduce the federal aid states depend on and weaken the economy when it’s supposed to be in fragile recovery. More austerity right away is exactly what’s needed!
* Another myth about government spending crashes and burns: When Dems point out that they already agreed to over $1 trillion in spending cuts in 2011, you frequently hear the refrain from the right: Yeah, but spending cuts never end up happening! One of the tales behind this idea is Ronald Reagan’s claim that he made a deal to trade tax hikes for spending cuts — and the cuts never materialized. Glenn Kessler dismantles this one thoroughly.
* And is the conservative dream dead? Paul Krugman on the real reason Republicans won’t detail spending cuts and loopholes they want: The conservative dream of dismantling the welfare state has been defeated, leaving the GOP with no clear governing agenda that would gain public acceptance. Therefore, they can’t risk making any real proposal in the fiscal talks. As Krugman notes, however, House Republicans can still do a great deal of damage, and we’re in a situation that is genuinely dangerous.