Divided We Compromise?

(Kevin Harber)

(Kevin Harber)

As we go into the Christmas season, we are inundated with reports of a looming “fiscal cliff”. If the Republicans and Democrats do not reach a deal by the New Year, an automatic set of tax increases and spending cuts will take effect, an outcome that is almost universally described as harmful to the economy. With the sides so bitterly divided, is a compromise possible? Despite the worrying, yes. Is that the best outcome? It depends.

The effect of the constant media drama can be seen among the general public. Although over 80 percent of Americans fear the fiscal cliff, only about 26% understand “very well” what will happen if both sides do not reach a deal.

Most people agree that both sides need to compromise in order to avert disaster. A “balanced approach” is advocated by both sides, economists, and the public.

Republicans were initially criticized because they were expected to hold to the infamous “anti-tax pledge” advocated by Grover Norquist. Almost immediately, however, Republicans demonstrated their willingness to compromise on the tax issue. Republicans have offered roughly $800 billion in tax increases, half the number the President is now demanding.

It is worth noting, however, that the President argued for only $800 billion in taxes during the last debt-ceiling negotiation. It can be easily argued that Republicans have compromised to a great degree on this issue, unlike the President, who made the claim that this is “one principle I won’t compromise on.”

The other side of the debate looks at cuts to spending and entitlements, in many respects more important for long-time fiscal sustainability. Although most Americans realize the dangerous trajectory the country is on with the growth of entitlement spending, most are reluctant to advocate any of the tough decisions.

In that respect, it may be worth “going over the cliff” for the good of the country in the long run. Mark Zandi, chief economist for Moody’s Analytics, argues,

“I would not come up with a deal unless it’s a really good deal before the end of the year… I would take it into next year if that means a better deal.”

Former Senator Alan Simpson, also of the Simpson-Bowles commission, agrees:

“The entitlements are the engine on the train driving us to the cliff. They were on automatic pilot.”

The impending cliff, although worrying, demonstrates the value of a divided government being forced to compromise. Let’s say both sides can’t reach a deal and we “fall off the cliff?” Tucker Carlson and Neil Patel make a convincing point that, despite the adverse economic effects, it could spur an important public debate about the true cost of government:

“Nobody wants to see middle class families pay thousands a year more in taxes. On the other hand, that’s money the government has already spent on programs they likely support. It might be useful for them to know that, and to consider the consequences of it. Until they do, there is no hope for spending reform.”

Though an effective and far-reaching compromise is entirely possible, we should keep in mind that going “over the cliff” may be better for the country than another last-minute deal that “kicks the can down the road” without taking steps to solve our long-term problems.

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4 responses to “Divided We Compromise?

  1. Apart from the digs on President Obama without corresponding digs on Boehner, well said! Did you see Simpson Bowls on Jon Stewart. He was Great! Since he is currently not an elected official he could speak truthfully without fear.

    • I haven’t, but I’ll try to find the video. Honestly, the last time I remember Boehner saying “I won’t compromise” on a fiscal deal was in 2010 – which I didn’t feel was as relevant as Obama’s similar, but more recent, quote.

    • Also interesting is the discrepancy between Pelosi and Obama:
      Pelosi: ““It’s not about the rates… It’s about the money….It’s about getting the money to reduce the deficit, to grow the economy and to unleash that power.”
      Obama: “We’re also going to have to ask the wealthiest Americans to pay higher tax rates… That’s one principle I won’t compromise on.”

      So is it “principle”, or is it really about raising revenue? Because the Republicans have come up with 800 billion in revenue (96% of which paid for by the rich) without having to raise rates at all. Why that is so unacceptable, I don’t understand.

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