December 24, 2012

Now that negotiations over a “fiscal cliff” deal have stalled in the House of Representatives, there are some lawmakers looking to the Senate to take action. But, as with the House, a deal in the other chamber requires some consensus on the what of the nation’s problems. Unfortunately for those who want to avert the fiscal cliff, that consensus doesn’t exist. Here’s the New York Times with more:


Sen. Kay Bailey Hutchison

Senators Kay Bailey Hutchison of Texas and Johnny Isakson of Georgia, both Republicans, implored Senate leaders to reach an accommodation with Mr. Obama when Congress returns on Thursday, even if that meant that taxes would go up for those with high incomes and that spending cuts would be put off.

Of course, Republicans and Democrats would have to craft new legislation — the bill passed in August only preserved tax cuts for income under $250,000, leaving other aspects of the fiscal cliff unaddressed. But Democrats will only introduce legislation if Minority Leader Mitch McConnell can assure them that it won’t be filibustered, and if John Boehner can guarantee that it will pass the House. But that’s not a guarantee that either leader can make.

In the House, of course, Republicans have rebelled against tax hikes for anyone — including the wealthiest Americans. And in the Senate, where one member can block legislation, conservative lawmakers insist that tax increases are not a solution to the problem:

Asked if Republicans might filibuster the president’s backup plan, Senator John Barrasso of Wyoming, a member of the Republican leadership, said on “Fox News Sunday”: “I just don’t think this is going to solve the problems — it actually doesn’t solve the problems. We have a spending problem in this country.”

For those who hope to see a deal before January, it’s worth appreciating the large expanse that separates the two parties. It isn’t just that they disagree on tax hikes — they have a fundamentally different view of what ails the economy. Democrats — as evidenced by their continued support for unemployment insurance, infrastructure spending and broader stimulus — believe that the economy has been held back by insufficient demand. In which case, the best thing government can do is continue to spend and put resources into circulation — it’s why President Obama’s original request on the fiscal cliff included $425 billion in stimulus through job measures and tax extenders.

This is the mainstream view of the problem (and solution). Republicans, and conservatives in particular, disagree. Lawmakers such as Boehner and Barrasso insist that high spending and deficits are holding back the economy and that tax hikes are unnecessary — lower spending, especially on entitlements, is enough to fix our finances and get the economy back in order.

The big, obvious problem is that none of those things are true. The country’s high deficits have far more to do with economic slowdown — and measures meant to reduce joblessness — than it does with excessive spending. A full economic recovery would create hundreds of billions in new revenue and kick a large dent in the current deficit. There is a long-run budget problem, but that’s — by and large — driven by the rising cost of health care. Cuts to Social Security — floated in the most recent White House proposal  — would do little to address the problem.

And then there’s the fact that other countries, such as the United Kingdom, have tried to cut their way out of the recession, with predictably disastrous results; the country is just now coming out of its austerity-induced double-dip recession.

In any case, you can’t bridge this fundamental difference of perception with hard-nosed deal-making. If there’s anything that will force Republicans to budge, it’s an external shock to the system. And in this instance, that might mean just going over the fiscal cliff.

Jamelle Bouie is a staff writer at The American Prospect, where he writes a blog.