POLITICS

How The Washington Post enables economic malfeasance

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Politics,Beltway Confidential,Conn Carroll

The Washington Post has a front page story today on a push by corporate America urging Congress and the White House to avoid the fiscal cliff. The story begins:

The largest U.S. financial firms warned Thursday of dire consequences if Washington fails to head off year-end tax hikes and spending cuts, saying they could jolt the economy into recession and prompt a new and dangerous downgrade of the U.S. credit rating.

These projections come as U.S. business leaders have been escalating their lobbying on behalf of a bipartisan deal to avoid the “fiscal cliff,” pressing their case in a series of meetings with key members of Congress.

On Thursday, 15 of the nation’s largest financial companies warned President Obama and Congress in a letter that interest rates could spike significantly if policymakers do not agree to stop the series of automatic tax hikes and spending cuts and replace them with a long-term plan to tame the federal debt.

And it is true: letting the scheduled $500 billion in tax hikes and $100 billion in spending cuts go ahead as planned on January 1st would be an economic disaster. The Congressional Budget Office predicts it would send unemployment back above 9 percent.

So how is The Washington Post enabling this economic disaster? By falsely creating the perception that Republicans will cave on tax hikes if Obama wins reelection. On Thursday The Washington Post’s Lori Montgomery reported:

Last week, Sen. Charles E. Schumer (D-N.Y.) planted a flag firmly for returning the top rate to 39.6 percent, arguing that Obama has made higher taxes for the rich a centerpiece of his reelection campaign and that polls show the public overwhelmingly supports the Democratic position.

“We have worked very hard to separate tax breaks for the rich from tax breaks for the middle class, on both ends of Pennsylvania Avenue,” said Schumer, the No. 3 Democrat in the Senate. “The fact that we’re winning on this issue is a sea change.”

Some Republicans — such as Sen. Jim DeMint (R-S.C.), a tea-party favorite — have conceded that an Obama election victory would amount to a mandate to raise the top rates.

Linking to Montgomery’s article, The Washington Post’s Ezra Klein then wrote:

The Obama administration believes – and, just as importantly, they believe Republicans believe — that they’ve got the leverage here. … [The fiscal cliff] is bad for the economy, but it also effectively ends our deficits with a mix of tax increases and spending cuts more progressive than anything any Democrat has dared propose. Republicans absolutely can’t let it happen. But the only way they can stop it from happening is to make a deal.

Oh but the Republicans absolutely can let the fiscal cliff happen. And contra Montgomery’s assertions, DeMint has never suggested that he, or any other conservatives, would cave on tax hikes if Obama was reelected. Contacted for comment, DeMint spokesman Wesley Denton said of The Post’s report, “President Obama won’t agree to anything that doesn’t include tax increases, which is one of the biggest reasons he should be defeated this November. And this is also why Senator DeMint opposes a lame duck session. We shouldn’t have politicians cut deals for higher taxes after they’re kicked out of office, we need a new president and a new Congress address these issues next year.”

The key to any successful negotiation is accurate knowledge of your partner’s lowest acceptable offer. If you underestimate how little they are willing to accept before they walk away from the table, you will end up without a deal every time. And that is exactly what Obama has done at every stage of his presidency. On the stimulus, on Obamacare, and on the debt limit, Obama underestimated the concessions he would have to make to win Republican votes. As a result he get zero Republican votes on the stimulus and Obamacare, and his grand bargain debt deal completely failed.

By, again, feeding Obama’s delusions about what Republicans are willing to accept to avoid the fiscal cliff, The Washington Post is virtually guaranteeing that is exactly what will happen if Obama is reelected.

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