Repeal the "fiscal cliff"

[cos]

[I also posted this on Blue Mass Group]

We hear a lot about Congress and Obama working to find some elusive deal that could stave off the "fiscal cliff", and occasionally we also hear about why we should to avoid it: According to the Congressional Budget Office, allowing the "cliff" to happen is likely to send the economy back into recession in 2013, and sharply increase unemployment.

What we don't hear much about is that Congress can simply repeal the fiscal cliff, without any complicated deals.

"Sequestration" - the automatic spending cuts that start to take effect in January - is just a law passed by Congress in 2011. Congress can repeal it, and that alone would be enough to prevent a recession in 2013 according to the CBO report - even if all the Bush tax cuts expire.

Extending the payroll tax cut and unemployment benefits would double the impact. Extending the Bush tax cuts on income below $250,000 would do even more (In contrast, extending the Bush tax cuts on higher income would, according to the CBO, have very little impact). But even if we did neither of those sensible things, just repealing sequestration would be much better than doing nothing. Neither Congressional Democrats nor Republicans actually like sequestration or want it to happen. So why do we hear so little in the news about that option?

I started a petition on change.org: Congress: Repeal the "fiscal cliff".
Please sign, re-post it, and send it on to others.

Comments

[cos]

Huh, I'm not sure where you got this being about "more informed" vs. "less informed" people - the problem I'm pointing to is that this element of "why not just repeal it?" is missing from the public discourse among *informed* people. Informed doesn't mean they're focusing on the right things or noticing all the possibilities. Many informed people tend to mostly notice whatever the media and political leaders focus on, and "just repeal it" is pretty much missing from the national debate.

However, you're also giving a very good example of how informed people, such as yourself, can misunderstand and be mistaken. As, I believe, is the case with a majority of informed people today regarding this issue. You're totally mistaken about taxes vs. sequestration. Democrats do not need to extract a tax deal to repeal sequestration - repealing it is pure win for Democrats, nothing lost whatsoever. If Republicans won't do a deal on taxes, then all the Bush tax cuts expire at the end of the month, at which point Democrats can again propose legislation to re-cut taxes on income below $250K, exactly what they're proposing now. Republicans would be in an even worse position then, because they'd be trying to oppose a tax cut for everyone, simply in order to try to extract a bigger tax cut just for high income people. But the basic point here is that all of the pressure for a tax deal comes from the fact that if nothing is done, all the Bush tax cuts automatically expire at the end of this month. Repealing or not repealing sequestration has no effect on that one way or the other.

Republicans are the only ones who gain any leverage from not repealing sequestration, because even though they don't want sequestration to happen, they know the Democrats don't want it either, and they hope to hold it hostage to get Democrats to agree to high income tax cuts or social security cuts or something. There's no reason whatsoever for Democrats to use sequestration as a hostage maneuver.

However, as I noted, Republicans can't credibly use this maneuver either if it's widely exposed, and widely exposed that there's such a simple solution: repeal it, and have your argument about taxes separately. That's why it'd be extremely politically valuable to push "just repeal it" into the public debate.

[plymouth.livejournal.com]

However, you're also giving a very good example of how informed people, such as yourself, can misunderstand and be mistaken.

You seem to be operating under the "if people knew what I know they'd all agree with me" assumption. It doesn't work like that. There's nothing in your following paragraph that is new information to me - I simply disagree with you.

[pseydtonne.livejournal.com]

Upvoted.

...and I hate having to point this out to cos, a man that has worked on really important political campaigns in Cambridge.

[auros]

You know what, I've just realized that part of the problem here is that you think the Republicans want to repeal the sequester. You're wrong about that. They only want to repeal the defense part of the sequester -- and transfer those cuts to the discretionary non-defense part of the budget. (How do I know? It doesn't require mind-reading. They passed legislation in the House doing exactly that!)

And your point that Democratic leverage becomes stronger after the Bush tax cuts are expired is, um, kind of making our side of the argument. Democrats are in a much better position to insist that Republicans roll back the NDD part of the sequester, replace the defense part with smarter cuts, kill the debt ceiling, etc. The Dems simply propose a bill that offers a middle-class tax cut, with appropriate riders, and dare the Repubs to vote against it. The fact that Democratic leverage improves after Jan 1 is why I have been calling and emailing my House and Senate representation and asking them to stop trying to get the Republicans to give in on an extension of the middle class tax rates now. (Which is the version of the idea of "simply repealing the cliff" that is, unfortunately, in wide circulation.)

Going over the "cliff" will do minimal harm to the economy if it's resolved even within a month (especially if the ultimate resolution retroactively credits back the extra middle class taxes collected during that time), and doing so will mean we end up with a deal that's better both politically (and while in normal times I'd consider that a minor point, given that the modern GOP has made itself a threat to democratic governance, I consider it a key goal for the good of the country to politically discredit them so utterly that either a moderate faction can take back over the party, or a new party can rise to take their place) and substantively (in terms of the macroeconomic policy that would be best for the country).

You also seem to be suggesting that "repealing the fiscal cliff" means only repealing the sequester, when in fact the common understanding of "the fiscal cliff" is the combination of the spending cuts and tax hikes. So a repeal of just the sequester would not be a repeal of the fiscal cliff (or curb, or speed bump, or whatever).

In any case, I would expect there would not be more than two or three House Republicans willing to vote for a full repeal of the sequester with no replacement spending cuts, right now, even if Dems felt like taking the bargaining chip of the defense cuts off their side of the table in exchange for the NDD cuts. Which they don't.

PS: Here's John Boehner, today, saying that he wants to hold the debt ceiling hostage again.