Fiscal Cliff 2013: Here is the Best Strategy for Republicans

There are two reasons why the Republican Party has absolutely no leverage in the upcoming “fiscal cliff” negotiations.

First, President Obama ran on a deficit reduction approach that emphasized the expiration of the Bush-era tax cuts on Americans making over $250,000. His re-election confirms that, at the very least, Americans were not willing to punish the president politically for taking this view.

Second, the Republicans have a credibility gap. Their record under the last administration, which saw a near doubling of the national debt in absolute terms, has haunted their recent conversion to fiscal sanity.

A case in point was last year’s debt ceiling crises. For the first time in recent history, House Republicans chose to fight out-of-control government spending by holding up the raising of the national debt limit, which would have crippled the country’s borrowing authority until it could get a dollar-for-dollar match in spending cuts. This Republican “last stand” backfired. The nation’s credit rating was downgraded for the first time in history while both S&P and the American public blamed Republicans.

Should the GOP take a “last stand” on taxes, it will bear all the political risk with little if any reward. Should they remain firm on extending the Bush-tax rates for the wealthy at the expense of raising tax rates for all (the Bush tax cuts all expire on December 31) they risk alienating the 98% of Americans whose taxes would actually rise; a move the public will not forget. Simply put, the GOP is no position to play political hardball on taxes.  

Rather than staking their ground on the Bush tax rates, a move that even reputable conservatives concede will not help either the economy or the budget deficit, the House GOP should actively push two broad concepts: 1) a tax reform solution that raises more revenue than the president’s current plan, and 2) a tax reform solution that remains both pro-growth and progressive (the rich will pay more).  

By framing their stances in ways that actually address the country’s short-term fiscal challenges in an intelligent and bi-partisan way, Republicans would begin to gain back the trust that precedes electoral victories: the trust of governing.