There’s been a lot of debate about which side has more leverage in the current “fiscal cliff” conversation. This cartoon in The Washington Post over the weekend reflects a growing consensus among some liberals that the president could maximize his leverage by notagreeing to a deal.
Here’s the argument: Allowing the Bush tax cuts to expire December 31 could create revenue from rate increases on the wealthy; then Democrats could work on legislation to restore the cuts to the 98% of Americans making less than $250,000 a year. The logic is that it would be easier to pass a tax cut for 98% of Americans in January than to negotiate with Republicans over tax rates for middle class and wealthy Americans now.
“Democrats would be in a good position,” Rep. Peter Welch (D-VT) told The Huffington Post. “Those of us who favor revenues as a significant component would be able to introduce legislation for 98% of Americans. In my view, you’d get a 100% vote for that tax cut.”
The Wall Street Journal’s Gerald Seib reluctantly agrees. “In the current negotiating cycle, the consequences of failing to come to an agreement are much less catastrophic for Mr. Obama,” he writes. “While nobody wants that outcome, plenty of Mr. Obama’s Democrats would be more than happy to see a big tax increase and defense cuts.”
Not so fast, says The American Enterprise Institute’s Marc Thiessen in an editorial in The Washington Post. Yes, Democrats would get their rate hikes on the rich, but they’d also see the expiration of many taxes that Democrats support. The lowest income tax bracket would rise from 10 percent to 15 percent, the child tax credit would be cut in half and many more Americans would be hit with the alternative minimum tax.
To suggest that both sides have as much to lose as each other is folly, says New York Magazine’s Jonathan Chait. House Speaker John Boehner (R-OH), he argues, already revealed his hand by bringing the broad outlines of a deal to Friday’s White House meeting. “Let us reason together,” Chait writes. “If one side wants to cancel the budget trigger, and the other side wants to keep it in place, is it true that both sides want to go off the cliff? No, it suggests that Boehner and Obama both grasp that the ‘fiscal cliff’ increases Obama’s leverage.”
“As far as I’m concerned, let it expire, it’s a product of a Tea Party crisis that was manufactured by right-wingers to focus on the deficit and not jobs,” argued Ari Melber, columnist for The Nation on Monday’s show. “Let it expire, let the tax rates go up and then come back to the table and get us a jobs plan.”