Now that the fiscal cliff debate is settled, and a deal has been reached extending the Bush-era tax cuts for Americans making under $400,000 and households making under $450,000, three major realities of American government have been clear:
1) Tax Debate Still Favors Conservatives.
Many conservative legislators and pundits viewed the fiscal cliff deal as a sellout to liberalism and higher taxes. But although it did raise both the payroll and income tax, conservatives should be rejoicing at how small the tax increase really was. Consider the situation – liberals held all the cards on the fiscal cliff: Obama and the Democrats won the 2012 election by a substantial margin; according to Real Clear Politics’ average of polling, Obama has his highest job approval numbers since 2009, and Democrats fare over 10 points better on a generic ballot than Republicans; and the structure of the fiscal cliff meant that Republicans needed to affirmatively pass legislation to prevent taxes from going up, while Democrats only had to run out the clock to make taxes go up. Despite all of these advantages for the pro-taxation side, the final deal had only $620 billion in increased revenue, compared to the 1.6 trillion originally sought by President Obama. The Bush-era rates have been made permanent for 98% of the population. America, unlike the nations of Europe, remains deeply skeptical of high taxes and the government they fund. Conservatives should rejoice at this outcome, rather than lament it.
2) The Republican Party is Still Unable to Control Hardline Legislators.
A major difference between our two political parties is now more apparent than ever. Democrats are able to control their ideological hardliners, while Republicans are not. When news broke that the fiscal cliff deal would only raise taxes on Americans making over $400,000, the left-wing of the Democrat Party was angry that Obama did not hold firm on $250,000. Yet this anger had virtually no effect on Democrat voting behavior, and Democrats ended up providing the majority of the votes for the final deal in the House of Representatives. House Republicans on the other hand, aware of the scalps claimed by Tea Party primary challenges, refused to support even a tax increase only on those making over $1 million dollars. This only served to weaken Boehner’s negotiating position, as it became clear that he would be unable to deliver his caucus’s votes even if a deal was reached. Americans watching the fiscal cliff debate saw a Republican Party in disarray, and if this continues to be the message sent by Republican legislative behavior, the American electorate will take notice in the 2014 midterms.
3) Crises Are Ineffective at Forcing Spending Cuts.
The fiscal cliff should be an object lesson for conservatives that engineered crises are ineffective in forcing meaningful spending cuts or entitlement reform. Like the debt ceiling debate back in 2011, conservatives approached the fiscal cliff hoping to use the looming deadline as leverage to force entitlement reform. This did not work with the debt ceiling, and it did not work here. Republicans were unable to even make gains on converting social security inflation calculations to Chained CPI, the normal means used in the modern world to calculate inflation. This is because any crisis severe enough to force the Democrats to capitulate is also severe enough to place the Republicans in the untenable political position of being blamed for large-scale economic damage. Conservatives should renew their faith in the traditional budgeting process, the means by which the Republican Congress of the 1990s reduced spending and reformed welfare, rather than trying to govern by forced crisis.