COMMENTARY | The so-called Plan B initiative by Republicans was intended as a middle ground that would save face and attempt to toss the Fiscal Cliff hot potato back into the hands of Democrats. In making his statement about the Fiscal Cliff today, Obama comes off as a kindergarten teacher who is trying to get the children in Congress to behave. Today happens to be the last day Congress will be in session for 2012. January 1 is the deadline for avoiding middle class tax hikes. Obama has attempted to grease the wheels of bipartisanship and avoid plunging off the edge of the Fiscal Cliff by kicking the can down the road.
The Fiscal Cliff is one thing both parties want to avoid, although Democratic states are projected to be hurt the worst. In what can only be called massive irony Democrats are supporting the Bush tax cuts, knowing that a major tax increase on all levels would devastate an economy that is in recession. The budget cuts of the automatic sequester would hit both defense programs and Medicare and Social Security entitlements while also raising taxes.
While in general Congress does need to gets its financial house in order having all of this happen at once is usually not good. Neither is delaying a solution. The last time that Congress kicked this can down the road the stock markets dropped massively in the following weeks.
Obama claimed that “this isn’t simply a contest between those who look good and those who don’t.” Unfortunately, for those looking from the outside in that’s all it looks like. Both parties want the other to take the fall for the budgetary mess our country is facing.
John Boehner told the Washington Post that he thought the Democrats should bear the responsibility if the nation went over the Fiscal Cliff:
“I don’t want taxes to go up; Republicans don’t want taxes to go up,” Boehner said. “But we only run the House. Democrats continue to run Washington.”
Newt Gingrinch told ABC of the Fiscal Cliff debates are merely a political ploy:
“It is an excuse to panic. It is a device to get all of us running down the road so we accept whatever Obama wants, because otherwise we will have failed the fiscal cliff, and how can you be a patriot if you don’t do what the fiscal cliff requires?”
The way that Obama handled the Fiscal Cliff statement firmly puts the ball back in the court of the Republicans. Here’s why.
At this point the details of the Plan B don’t really matter. The House of Representatives, which has a Republican majority, would not pass Plan B so obviously it’ll never even reach the Democratic Senate. Suffice it to say that the Plan B had an interesting background, with most of the ideas once being espoused by Democrats…
Before an income of $250,000 became the marker for who is considered “the rich” the Democrats were actually calling for the top marginal income bracket to rise only on those making $1 million or more. The rest of the ideas in Plan B were the result of the deficit super-committee commissioned by President Obama, and many of the recommendations came from Democrats. So why are Democrats now shooting down their own advice?
Even before all this, the Senate under Harry Reid rarely allowed a vote to consider a budget. One of Congress’s main roles is to create a Federal budget. The Presidential office can make suggestions for them to vote on, but Obama cannot enforce a budget unilaterally without Congressional approval. The Judicial branch has nothing to do with it at all. The extremely short version is that in the last several years the Republican House has passed many budgets, the Democratic Senate passed none, and they even shot down Obama’s budget with a 99 to 0 vote.
So the political stage was set by the Democrats’ $1.33 trillion deficit and they craftily decided to use class warfare as a method to frame Republicans as being the bad guys (not that they haven’t been doing stupid things themselves, mind you!). The proposed tax increases for the rich proposed by the Democrats seem harmless enough. They even claim financial problems are due to lacking revenue, which was true years ago but no longer. Obama also claimed that 98 percent of small businesses would not be harmed by this decision. He didn’t explain where that number came from, but I can guess.
According to The Wall Street Journal, 98 percent of jobs were through small businesses and 48 percent were projected to see their taxes rise:
“The 3% figure, which is computed from IRS data, is based on simply counting the number of returns with any pass-through business income. So, if somebody makes a little money selling products on eBay and reports that income on Schedule C of their tax return, they are counted as a small business. The fact that there are millions of people in the lower tax brackets with small amounts of business income may be interesting for some purposes, but it is irrelevant for the assessment of the economic impact of the tax hikes. The numbers are clear. According to IRS data, fully 48% of the net income of sole proprietorships, partnerships, and S corporations reported on tax returns went to households with incomes above $200,000 in 2007.”
Essentially, they are saying that if you subtract the self-employed, which technically includes writers like me, then 48 percent of “real” small businesses are effected. And that quote is from 2010! So Democrats have known this for years yet still continue to repeat that information.
So that is how Democrats set the Republicans up. They knew they would balk at any action that would harm small business in America. They also knew that their suggestion wouldn’t be taken too seriously, since the additional revenue would only cover mere days of the government overspending. Thus, the Republicans tried to make a symbolic gesture by taking the Democrat’s own former plans, calling it Plan B, and rubbing it in their faces.
Apparently Republicans didn’t get the memo from Boehner since they shot down the Plan B bill. This leaves Boehner no capability to politically spin Plan B before the Senate, saying, “But wasn’t this an earlier plan of yours?” This would have also made a broader point with the public about the unwillingness to compromise.
In sum, this action by Obama allows him to be the compromise hero while Republicans had the rug pulled out from underneath any counter-argument they may have made. Still, the good news is that both parties may now at least avoid the near term pitfall. The question is, after watching Obama’s Fiscal Cliff White House statement do you think the President and Congress are up to the task of solving the real problems in 2013?