Tuesday, November 13, 2012

Will Republican Infighting Push Us "Off the Cliff"?

Last Thursday, we discussed the coming "Fiscal Cliff", what it means for us, why we're nearing it, and how to escape it. Long story short: "The Fiscal Cliff" will trigger across-the-board spending cuts and tax increases on January 1 if Congress can't agree on a budget deal in the next six weeks. And since "The Fiscal Cliff" will hinder economic recovery if enacted (by cutting investment in our economy), and since it contains a whole lot of politically unpalatable cuts as well (like military spending cuts), there's certainly plenty of incentive to avoid this "Fiscal Cliff".

So why haven't we seen a deal develop yet? And why does it still seem so difficult for Congress to even negotiate in good faith on this? Surprise, surprise, it's Republicans trying to govern while being weighed down by "tea party" extremism.

Republican leaders are reevaluating their relationship with the tea party, a political marriage that has fueled gridlock and, some believe, played a role in the GOP's dismal outcome at the polls. The intense conservative opposition to tax increases could thwart the desire of Boehner and other Republicans to show voters the party can help make Washington work.

The speaker has made an early effort to strike a balance.

In the days after the election, he sounded a public note of conciliation, telling the president, "We want you to succeed," as he signaled a willingness to shift from the party's hard anti-tax position.

But he also made clear that the party opposed any increase in tax rates. Obama has called for taxes to rise for the wealthiest Americans. Specifically, Obama has said he wants to raise rates to President Clinton-era levels on income above $250,000 for families and $200,000 for individuals. [...]

This is the complicated courtship the chain-smoking speaker must undertake in the next 50 days as he attempts to satisfy his right wing while meeting Obama across the aisle for the deal that voters — and the stock market — have signaled they want.

Even though Harry Reid is eyeing certain Senate Republicans (including fellow Nevadan Dean Heller) to cross the aisle and support a comprehensive budget deal, the math in the House is much more complicated. And that's primarily because Boehner still fears being toppled in a "tea party" coup. Yet if he stands with the teabaggers in sending America "Off the Cliff", his entire Republican Party may be blamed for another economic slowdown and global financial panic. And because G-O-TEA intransigence (and resistance to fixing the debt ceiling) is what passed the Budget Control Act (which initiated this "Fiscal Cliff") in 2011 in the first place, this truly is a problem of their making.

This is what's weighing on the minds of Republican leaders in DC now. The only surefire way for them to escape being blamed for another "Great Recession" is by reaching a budget deal with President Obama and Senator Reid. But if they do that, they risk another "TEA" fueled revolt in their own party. So what will they do?

The clock is ticking... And the cliff is near.

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