The headline on Breitbart: "Bill Kristol Caves on Higher Taxes." Oh, the hand wringing...
Giving in on Obama's tax hikes would not win many votes. But it would certainly end the GOP as a viable opposition.
Kristol has embraced a policy that is nothing more than a left-wing, soak-the-rich meme. It would not close the budget deficit; at best, it would reduce the annual $1 trillion-plus deficit by 7 cents on the collar. Raising taxes would, however, hurt investment and punish success. And Republicans have been burned before by agreeing to deals in which Congress hikes taxes and the promised spending cuts never materialize.
Author Joel B. Pollack is laboring under one huge misconception. He seems to think Democrats care about the economy. Oh, he's certainly right about civilian Democrats, the ones not in politics. They'd like the economy to bounce back so that there are jobs and pay raises again. And he might be right about one or two of the Democrats in Washington.
As for the rest of them, Obama has demonstrated that they don't need a good economy to get re-elected, and what's more, a bad economy is so much more useful. Think of it as a crisis that won't go to waste. When people are suffering, that's the time to devise programs to assist. Mostly the programs assist Democrats' re-election prospects.
And let's not forget, Obama's goal has always been the transformation of America. He's been pretty successful so far, but there's more to come. An economy in crisis is the more fertile ground for achieving it.
In fact, our economy is in such dire straits right now that neither tax cuts nor tax hikes will make a noticeable difference. The absolute best we can hope for is continued sluggish growth that merely fails to keep pace with population growth. It's more likely that we're headed back into recession, or worse we might be in for a catastrophic meltdown. But the only question of interest to Democrats is who gets the blame for it.
Obama spent the past two years warning voters about going back to the policies that got us into this mess to begin with. The great failure of the Romney campaign was to let Obama keep repeating his nonsensical theory without challenge him on it. Everybody knew he was blaming "the Bush tax cuts," but no one ever made Obama say it out loud and then have to defend it.
Repeated endlessly without challenge, Obama's campaign sound-bite became a plausible explanation for enough voters to make a difference. Bill Clinton even trotted out on the campaign trail to reinforce the message, implying that the economy boomed in his day because the wealthy paid more taxes.
I know. It's really simple minded, but there it is. Never mind that the Clinton boom was the result of a lot of Republican policies that Clinton wisely adopted after 1994 when congressional Democrats got booted out of the majority for the first time in 40 years. The North American Free Trade Agreement, welfare reform, spending restraint, and a dot-com bubble. All of these things, in combination with a broadened tax base, stunned the world with the first U.S. budget surpluses since the Kennedy administration. It was shocking. No one would ever have dreamed it.
There will be no such boom in the Obama second term. Tax and regulatory policies will keep the damper on, and for at least the next two years Republicans will be powerless to turn this disastrous economy around. The best we can hope for is that they block or delay the more permanently damaging policies that Obama intends to put in place. We just have to hope that the tipping point has not been reached, and that Republicans will be able to return America to a more market oriented economy and get some jobs growth.
In the meantime, a rise in marginal rates from 36% to 39% for high income taxpayers is not the most damaging policy proposal Obama has come up with, but fighting it could be the most damaging thing Republicans do. When negotiations are under way to avoid the fiscal cliff, Republicans can stick to their principles by announcing that they oppose the tax hikes because of the damage they'll do to the economy, but going over the fiscal cliff would be even more damaging. Republicans have to announce that Obama's tax and regulatory policies are killing the economy and killing jobs and there is nothing they can do about it, and then remind voters every day that Obama owns the economy.
Obama doesn't own it right now. He's sticking to the story that he's inherited George W. Bush's mess — again! He will continue to blame Republicans, and voters will continue buy it, especially if Republicans fight him on tax rates. The worst case is if we go over the fiscal cliff because Republicans fight a 3% tax increase. The damage to the Republican brand will be incalculable. The next worse case is if Republicans win on taxes. The economy will continue to stagnate but Republicans will be saddled with ownership of it. It's those Bush tax cuts that are killing us, you know.
Republicans have to wake up and realize that Democrats don't care if the economy goes to hell, in fact they'd prefer it. Instead of fighting the Obama on taxes, Republicans should go along with him, while at the same time announcing that they strongly disagree, but that it would be worse to go over the cliff. The point is to make clear that Obama's policies are not going to help the economy. But he won the election and now the economy belongs to him. It's a message that they must repeat every day from now until 2016.