Cliff 2.0: Dems Push $1 Trillion Tax Hike
The strategic miscalculation of Republicans in DC has been to think they are in actual negotiations with the White House and Democrats. They approach any major debate with an initial list of what they will cede, assuming the Democrats will counter with their own concessions. That isn't how the Dems have approached these debates. Rather, they accept the Republican offer as a new floor, and ratchet their demands higher. So it is again with the "fiscal cliff" and the looming debt ceiling.
Last week, Congressional Republicans accepted a Senate-negotiated deal to avert the "fiscal cliff." The deal provided the government with $620 Billion in new tax revenue and delayed automatic spending cuts for two months. Moreover, there were no new real cuts in spending. The deal was tax hikes now, with a Republican promise of spending cuts in the future.
GOP supporters of the deal said that it had "taken care of" the tax issue. All future negotiations over lifting the debt ceiling would be focused on the spending side of the ledger, they argued. I was skeptical of this argument at the time. Today, we learn my skepticism was well-founded:
Democrats say they want to raise as much as $1 trillion in new revenues through tax reform later this year to balance Republican demands to slash mandatory spending.
Democratic leaders have had little time to craft a new position for their party since passing a tax deal Tuesday that will raise $620 billion in revenue over the next 10 years.
In the coming weeks, Congress will begin debating an increase in the nation's debt ceiling, the statutory limit on the government's borrowing authority. Republicans have said they will insist on at least an equivalent amount of spending cuts for any increasing in borrowing. Democrats are now arguing that any reductions in spending must be "balanced" with an equal level of higher taxes.
The White House also supports a 1:1 ratio of spending cuts to tax increases as Congress seeks to finish the fiscal work left unresolved by the recently completed 112th Congress.
During the talks over the "fiscal cliff," Speaker Boehner asked Barack Obama what Republicans would get in exchange for their offer of $800 Billion in new revenue. Obama replied that, having won reelection, he gets those higher taxes "for free," and doesn't need to offer any concessions. The GOP, it seems, went ahead and gave it to him for free.
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