Bill Kristol had an interesting take on the Fiscal Cliff last Sunday November 11th on FNS–His position was, sure, give Obama his wish and let the top marginal tax rate on the top “2%” of wage earners rise back to where it was under Clinton, from today’s 35% to 39%.

Doing so accomplishes many things, some political, and some practical.

From a political standpoint, it removes the “Republican obstructionism/intransigence” label from Congress, thus denying President Obama of his straw man bogeyman. Obama has said all along, “We need a ‘balanced approach,’ some increased revenues and some spending cuts. I’m asking the wealthiest 2% to pay just a little more and I’ll preserve the tax cuts for everyone else.”

OK, if we go that route, then what are the spending cuts that Obama will offer? Which wasteful programs will be cut? Which vote-buying scam will be reduced? What major waste and fraud will be eliminated? All economists have agreed that raising the rate on the so-called “2%” will only reduce the deficit a small amount; that tax increase is mostly a symbolic gesture on the part of the President to mollify his base, so they can see him “sticking it” to those rich b*st*rds in the name of his prized ‘social justice.’

It’s noteworthy that the President is not particularly interested in increased revenue, as would be achieved by eliminating some deductions, reducing rates for all and streamlining the tax system, as some Republicans have put forth. No, Obama wants his revenues not from a streamlined tax system, but from a punitive attack on what he sees as undeserving ‘fat cats.’ He also doesn’t want to lose any control over being able to give out targeted tax breaks (as he would lose if the tax system were simplified and streamlined) to his pet industries and supporters. Solyndra, 123, etc…..that’s worked out pretty well so far! But he’s more interested in being able to influence vote support than raise additional revenue, and besides, the “rich” are such a nice target.
Still, the Republicans should accede to the 35 to 39% request. Can that “2%” group afford to pay the increase? Sure. What about the “job creators” who are taxed as individuals and will fall into that group? Well, it’ll hurt some, but the removal of the uncertainty will mostly offset any long-lasting negative effects. It’s been the Sword of Damacles of uncertain taxes hanging over small business’s head that’s inhibited expansion and hiring as much as anything else.

When things are uncertain, human nature is to sit on your hands and do nothing. That’s why there’s been no real hiring in the last 4 years–Obama has lurched around in such a haphazard and unpredictable manner from one temporary Bandaid tax break to another short-term regulation to another targeted program, that the business sector didn’t know what the heck was coming next.
So they sat on their hands and did nothing.

Now, if the tax rate goes up from 35 to 39%, “Hey, at least I know what the landscape is and I’ll adjust, because this is what it will look like from here on. Now I know.”
But the most important thing is that by doing so, the debt issue is now fully on Obama.

“We gave you what you asked for. We’re bipartisan. We cooperated, exactly as you asked. Seemed reasonable to us, and we’re reasonable people. Now it’s your turn.”

Man, if ever the phrase “Be careful what you wish for because it may come true” ever applied, it’s in this situation. If the Republicans give him his extra 4% on that top tax rate, then Obama will own the debt, forever. He won’t be able to blame President Bush or the wars in Afghanistan and Iraq or anything else. That’ll all be old news. Now it’s all on him. He’ll either have to make real spending cuts (a great practical outcome for the country), or if he doesn’t, he’ll be correctly and unarguably seen as “Mr. Debt/Spend/Waste” (a great political outcome for his opponents).

Comments