The "fiscal cliff" compromise

There are a lot of posts I see, from various liberal commentators, complaining that President Obama gave up too much. And there are a lot of posts I see on the other side, saying that the Republicans gave up too much. The fact that we see both of these means it's probably a good sign. There is still a necessary vote in the House of Representatives, of course, so it's not a done deal. But it's quite obvious that neither side can get all it wants. And I think that when both sides start off as far apart as they were, it can only be a good sign that both sides are unhappy.

There were a lot of issues, of course, that were not settled — kicking the can down the road a while. But with less of a time crunch, perhaps some compromise can be attained on these too — but even if not, the worst of the “fiscal cliff” crisis has been averted.

The only way a better solution could have been reached was if Mitt Romney had been elected to the Presidency. So under the circumstances, this was the best that could have been hoped for. And thanks to Vice-President Joseph Biden and Senate Minority Leader Mitch McConnell for negotiating it.

Perhaps a compromise is possible

Well, Speaker John Boehner has indicated he is willing to accept a raise in tax rates on people with income over a million dollars. And President Barack Obama has raised his $250,000 figure to $400,000. There is still a gap there, and other aspects that are also going to be problems, but each side has given a little.

Perhaps by Dec. 31, a compromise will be achieved. I hope so. There is still a week and a half to go.

Obama's "revenge tax"

There is a blogger who calls himself "Publius" — because that was the pseudonym adopted by the three authors of the Federalist Papers, I assume — who has finally explained, in terms I can understand, President Obama's insistence on raising tax rates, even though it would hardly make a dent in the deficit. And it is so clearly correct that I would like simply to repeat it here.

I was having trouble understanding why President Obama has been clinging so fiercely to his demands to raise the top marginal tax rate to the Bill Clinton-era 39.6%. By most accounts — especially his own — Obama is a very intelligent man, and surrounds himself with very intelligent people. Surely these intelligentsia must know that raising the marginal tax rate 4.6% on those earning over $250,000 per year will do virtually nothing to erase the national debt or close the deficit, do nothing to ease the plight of the rapidly growing number of poor Americans, and do nothing to help Obama’s miserable economy — in fact it may make his miserable economy even worse.

So the question I was having trouble answering is this: if Obama and his minions know these simple, self-evident truths, why are they so hell bent on such a tax hike?

Obama claims that he has a mandate for the tax increase; it was a campaign pledge, and therefore he must meet it. But as I recall, he also made campaign pledges in 2008 to close Guantanamo Bay, to fix the economy with a huge stimulus, and pledged in 2009 to cut the deficit in half in his first four years — broken pledges all. Since these, and so many of Obama’s other prior pledges have been broken, honoring a campaign pledge cannot be the true reason for clinging to his tax hike. Moreover, pushing legislation forward because it was a campaign pledge merely begs the question: why was it a campaign pledge?

Offered here are some possible reasons why.

A primary reason for Obama's insistence on raising taxes is this: a bully bullies because he can. Obama and the intelligentsia know that if Obama stands pat on raising tax rates — and Republicans balk — he can simply blame a Republican House for going over the cliff, which is much more proximate and much more plausible than blaming Bush.

And if the Republicans balk, Obama can appear heroic by insisting in January 2013 that the House reduce tax rates on the middle class, while maintaining the higher tax rates then in place for the top bracket. Or, as has recently been proposed, Treasury Secretary Geitner might give the middle class a temporary tax break until new tax legislation is passed; a bit of a gamble if the tax rate that gets passed is higher than the temporary tax rate, as it would stick the middle class with an unwelcome tax bill in April.

Sticking it to Republicans is but a part of a bigger Obama agenda — revenge. In the hours before the 2012 election, Obama urged his followers, saying, “voting is the best revenge.” How unifying. Obama’s revenge includes slapping higher taxes on America’s most productive wage earners. Obama’s tax hike is consistent with his liberal belief that those who have succeeded have not had to play by the same same rules as those as those who have failed, have taken unfair advantage of the disadvantaged, and have gained unearned success at the expense of the unsuccessful. Such perceived unfairness must be avenged, and taxing the rich is, for those who voted for it and the president that urges it, the best revenge. For this reason, I refer to Obama’s fiscal cliff tax hike as the “Revenge Tax.”

Revenge is akin spiking the football, or rubbing salt in the wound, or issuing the middle finger salute. But revenge, like a winning vote, is temporary; it satisfies for a season only. Obama hopes to change America forever. There is thus an even bigger reason for his Revenge Tax than simple revenge.

And raising revenue, at least with his Revenge Tax alone, is not that bigger reason. Speaker Boehner has already offered $800 billion in new revenues by reducing or eliminating tax breaks — i.e., loopholes — for upper-income people. But this is a “non-starter” for Obama. Again, the question must be, why? And the answer must be that the Revenge Tax is not just about raising revenue.

I believe Obama’s refusal to accept revenue by closing tax loopholes as a proxy for the Revenge Tax, and his insistence on that tax is for this reason: closing tax loopholes is a one-time event. Raising taxes, however, can — and often does — beget raising more taxes.

Increasing the marginal rate to 39.6% won’t do any good. Everyone knows this. Thus, we can expect that once Obama gets his 39.6% tax rate, we will soon hear that it wasn’t enough, that to meet the country’s growing needs, we must make the evil rich pay still more. Perhaps $250,000 of income for the top tax bracket will be lowered to $200,000 or $175,000. This is especially more likely as the “soft bigotry of lowered expectations” takes hold. The definition of “rich” will slide down the curve, as Obama’s broken economy makes more and more people poor and fewer and fewer people rich.

Ergo, the real reason Obama clings to raising the tax rates is to set the stage for repeated, increasing, expansive tax increases, until America’s tax rates approach those of Obama’s Utopian society — Europe. Obama yearns for Europe’s unaffordable healthcare, the so-called universal healthcare system, and I believe also yearns for Europe’s lofty tax rates. Here is what America may look like in the years ahead, if Obama gets his Revenge Tax, and in the process opens the door to giving America a Euro-tax makeover:

Top Marginal Tax Rates

France	75<%/td>
Sweden	56.6<%/td>
Denmark	55.4<%/td>
Netherlands	52<%/td>
UK	50<%/td>
Belgium	50<%/td>
Austria	50<%/td>

The question, therefore, isn’t so much whether America will go over the fiscal cliff, but whether by avoiding that cliff, America will open the floodgates to European style taxation.

More on the "fiscal cliff" controversy

I recently had an exchange of e-mails with my brother, who is politically somewhat more conservative than myself, though we are closer to each other in our views than either of us is to those our parents held. Some interesting points were made, which I will make public here. First, after I referred him to my post:

Actually, I read similar ideas to yours recently, soak the really, really rich, but leave the really rich alone. Well said on neither side being willing to compromise, when you wrote it, but there is breaking news. Joe Biden, the Clown Prince of Buffoonery, was quoted yesterday as saying that it doesn't have to be exactly 37 percent for the top bracket, it could be less, it's just the principle that the rich have to pay more.

To which my response was:

I suspect that some compromise like this will be attained in the end. What we really don't know is what is going on behind closed doors in secret negotiations, where Boehner's lieutenants and Obama's can make deals that neither can endorse in public because of the socialistic elements in the Administration and the TEA Party contingent within the House GOP.

He continued:

The Republicans were willing to compromise by expanding revenue, 800 billion worth, but that wasn't enough for the Dems, and is too much for the TEA Party.

What we have here are two opposed sides ON PRINCIPLE. (Old Yiddish saying: "Corrupt officials can be bribed into doing the right thing, but men of principle are much more expensive.")

To the Socialists, the high-earners are anathema. They contradict the very foundation of Marxism: From each according to his ability, to each according to his need. They get paid more than (the Marxists think that) they need.

To the Republicans, high-earners provide the life-blood and impetus of life's flows, without their spark of energy, the society would fail and wither. Everyone else (and that includes you and me) are hangers on, who should just shut up and follow, unless we want to become entrepreneurs and get some skin in the game. This is best represented by the works of Ayn Rand.

I had to agree with his comment that “[w]hat we have here are two opposed sides ON PRINCIPLE.” But my main point is that:

All that you say is true. BUT, sometimes it is necessary to make some concessions even from one's principles. The socialistic Democrats control the White House and (except for the filibuster rule) the Senate. The Republicans control the House. Nothing can be done at all unless all three can find agreement — the Madisonian principle enshrined in the Constitution. If neither one gives an inch, a result occurs that neither side wants to happen — it's like Prisoner's Dilemma: you have to make what seems to be the worse choice, or the net result is the worst possible alternative.

I'm willing to say as much publicly, and so this post.

The blame is shared

Most of the time, I have been siding with the Republicans in their opposition to President Barack Obama's ideas. And in fact I still think that the President must be faulted in these “fiscal cliff” negotiations for his absolute refusal to make the slightest move toward a compromise. But the Republicans are not doing so well in this exchange either. I don't see much willingness to compromise on their part, and I have to give credit to at least one Democrat, Sen. Chuck Schumer of New York, for actually putting forth an idea: Accept that some of the highest-income taxpayers will have to see a tax rate increase — that's what any compromise must be between Obama's “raise the rates on all over $250,000” plan and the GOP's “raise no rates on anybody” plan. But set the barrier higher. Sen. Schumer proposed $1,000,000, and perhaps a GOP counterproposal would move towards that point; but setting it still higher, say $2,500,000. But I don't see anyone on the GOP side making proposals like this.

If nobody on either side is willing to move toward the other, we will surely go over the cliff. And except for Sen. Schumer, I see nobody moving an inch.

And he still won't give an inch

It looks as though President Barack Obama is still unable to compromise on the issues involved in the “fiscal cliff” — he has just made a proposal to Congress that says, in effect, “Take it or leave it: my way or the highway.” Of course, the plan won't get out of committee in the House. But he'll try to blame the Republicans — and a lot of the American people will fall for his charges, I'm afraid.

If only John McCain were in the White House.

When will Barack Obama learn what "compromise" means?

For a brief moment, it looked as though President Barack Obama might have achieved a compromise with Speaker of the House John Boehner and the Republicans. He had hinted that he might approve a plan that would increase revenues from the well-to-do, without necessarily raising tax rates. But it is now clear that this will not be. He now says that he has a mandate from this election to raise those rates. And of course this means no compromise is in the works.

It looks as though the “fiscal cliff” is in the offing. Obama has no concept of what a compromise is. To him it means he calls the shots, and everyone else accepts his ideas, no matter how repugnant they may be.

It's going to be a long two years (or four, depending on the 2014 elections).