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Cowardice and appeasement won’t save the Republicans or the economy.
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Imagine someone who earns $1,000,000, pays $50,000 a year in mortgage interest, and gives away $100,000 to charity. If these deductions were capped at $50,000, per Corker and friends, her tax bill would be $35,000 higher than today. However, if the deductions were not capped and the top two marginal income tax rates were raised to the 36 percent and 39.6 percent levels that we saw under Bill Clinton, this taxpayer’s federal income tax bill would rise by $25,386 instead. She’d be almost $10,000 better off with the higher rates. In short, Corker’s bill penalizes not just expensive homes but major philanthropy as well.
Admittedly, this exemplar is not the ordinary person (in terms of income), and certainly not an ordinary Democrat (in terms of charitable impulse). And to be crystal clear, I am not arguing for higher marginal tax rates (more on that in a moment.) Perhaps Republicans feel that this is the best they’ll be able to do in negotiations with a re-elected president and public opinion polls that show some support for soaking the rich despite history suggesting that such a strategy is doomed to failure.
In an interview on CNBC, Senator Johnny Isakson (R-GA) obligingly offered that a means-tested cap on deductions “say at $50,000 or $30,000…makes more political sense.” Leave it to the GOP to negotiate with themselves, with Democrats smiling at their good fortune and wondering “will these people never learn?”
In the meantime, Senator Dick Durbin (IL), the second-ranking Democrat in the U.S. Senate, says that Medicare should be given more “solvency” (Democrat-speak for more of your money), that Social Security should not be part of fiscal cliff discussions, and that upper bracket tax rates should rise in addition to imposing caps on deductions. Republicans should take a lesson in negotiation strategy. Instead, they’re hitting the mat before the first punch is even thrown and blaming Grover Norquist for putting them in the ring.
At the risk of awakening the “shoot the messenger” crowd, some words of wisdom from New Jersey Governor Chris Christie, perhaps the political corollary to Jon Gruden’s laudatory language on Monday Night Football, bear repeating: “Real leaders don’t follow polls. They change polls.”
Republicans are and have long been truly terrible at explaining “conservative,” which is to say real-world, economics. Grover Norquist is better than most. But if GOP members of Congress don’t get better at this, and in a hurry, their poll-following fears will cause them to sell the nation down the fiscal river in a much more permanent way than even the Republican Congress during the George W. Bush years did.
The lessons are very basic:
In short, no person who is actually focused on the economic impact, rather than aiming to assuage liberal guilt or further an anti-wealth ideology, would consider raising income taxes — and this means total tax collections, not just tax rates. But then we are facing a rabidly ideological president who wants to raise taxes “for purposes of fairness” regardless of the economic impact.
Political reality may doom economic rationality, as happens more often than not in Washington, D.C. But like the Hippocratic Oath taken by physicians, our elected leaders — particularly those Republicans who should know better — must aim first to do no harm.
As for the fiscal cliff itself, the spending side, particularly “sequestration,” is undoubtedly a meat-axe-instead-of-scalpel approach. But when politicians have been unwilling or unable to cut anything of substance for more than a decade, almost any cut is a welcome one. And while the defense cuts are disproportionately — perhaps even dangerously — large (because yet again Republicans got snookered in negotiations with the White House), it is beyond time that politicians in both parties, but especially the GOP, realize that defense spending is not a jobs program, much less an entitlement destined never to decline in the districts of powerful members of Congress.
To put it another way: as politicians play Thelma and Louise politics with our federal budget, it is worth remembering that for many who saw that overrated film, the sight of the two going over the cliff seemed a fitting, even welcome, end to their destructive (of self and others) behavior.
And for those Republicans who are worried about the both the outcome of current negotiations as well as their reputation if they break their no-net-tax-increase pledge, going off the cliff solves both problems and puts the GOP back on a more level playing field for determining what comes next. Perhaps it is the aggressive therapy needed to treat the disease of metastasizing government. Better to suffer the nausea of chemotherapy than to die of national fiscal cancer hastened by complications of Potomac Fever.
The biggest risk of going off the fiscal cliff is not the short-term damage to the economy but the risk that an ignorant electorate, goaded by a leftist media, will respond by calling for more and bigger government, blaming Republicans for economic chemotherapy rather than worrying about the underlying disease. The results of our recent election makes that outcome seem sadly likely.
Republicans who would become, as Newt Gingrich described Bob Dole, “the tax collector for the welfare state” will one day wish that Grover Norquist’s ire was really the worst of their problems. Unfortunately, the worst we can do to these Jello-spined ersatz conservatives is not reelect them; the worst they can do to us is bankrupt our children while furthering the Obama/Alinsky dream of “fundamentally transforming” our nation. Sadly, some of them seem hell-bent on doing just that.
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