If you’ve enjoyed the fiscal cliff political theater that has consumed Washington over the past two months, you are going to love 2013. Yes, the White House and Congress did finally agree on a deal that prevented about $4 trillion of a scheduled $4.6 trillion tax hike, but there are many fiscal fights still scheduled to occur throughout the New Year.
First, in about six weeks, the Treasury Department will reach its legal borrowing limit. At that point, Treasury Secretary Tim Geithner will not be allowed to finance government spending by issuing new debt and will have to pick and choose which of the federal government’s many spending obligations it will and will not pay. Contra what some on the left believe, the 14th Amendment of the U.S. Constitution does not authorize Geithner to ignore the debt limit. What it does do is obligate him to make sure the federal government pays off its lenders first. And since the federal government is constantly taking in more money in taxes than it owes in debt service, there is zero danger the U.S. will default on its debt. But everyone else who gets payments from the federal government will be in danger of not getting paid. Since the federal government plays such a large role in economic affairs this will create chaos in the U.S. economy until the issue is resolved.
Then, after the debt limit is settled, Congress and the White House will have to decide how to resolve the scheduled $1.2 trillion in scheduled spending sequester cuts that were passed into law the last time the debt limit was raised and were delayed for two months as part of last night’s fiscal cliff deal. Failing to resolve those scheduled spending cuts would again force the Obama administration to stop making payments to many Americans expecting that income.
Then, after the debt limit and sequester is settled, Congress and the White House will have to pass legislation authorizing government funding for the next year. The Democratically controlled Senate has not passed a budget since Obamacare became law and as a result the federal government has been operating on a series of continuing resolutions ever since. The last one, passed in September 2012, expires March 27th. If no agreement is made on federal spending before that date, the federal government will be forced to shut down.
How each of these next fiscal crisis moments is resolved will go a long way in determining who got the better bargain in the fiscal cliff deal passed last night. If Obama is again able to raise taxes in any of the next three fiscal events, then this fiscal cliff deal looks great for the White House. They will have secured a $600 billion down payment on actually paying for the Obama welfare state and can slowly build to the $1.6 trillion he initially asked for.
But if Republicans hold firm, and do not agree to any new tax hikes, then this deal looks like a disaster for the White House. They will have blown a once in a generation opportunity to raise taxes by trillions of dollars on the American people and will be forced to pair back Obama’s previous historic spending gains.
How anything else gets done in this bitter environment (on guns, immigration, climate change, etc.) is hard to see.
From The Washington Examiner
Examiner Editorial: Worst 2012 lawsuits argue for 2013 reforms
Phil Klein: Memo to conservatives: tax cuts are not spending
Michael Barone: If demography is destiny, good news for Texas, North Dakota and D.C.
Mark Tapscott: Transparency advocates see tough year, growing ‘Windsorgate’ scandal at EPA ahead
In Other News
The Wall Street Journal, Companies Prepare for Health Law: One of the biggest decisions for many companies this year will be what to do about their health benefits. They have just 12 months before the major provisions of the federal overhaul law take effect on Jan. 1, 2014, reshaping health coverage in the U.S. Employers with at least 50 workers will owe penalties if they don’t cover full-time employees.
The Wall Street Journal, Lack of Grand Bargain Complicates Obama’s Priorities: The failure to craft a grand bargain to address the country’s fiscal woes means that contentious discussions about spending cuts and the debt ceiling will continue in 2013—potentially diminishing the time and goodwill Mr. Obama needs to pursue his policy priorities.
McClatchy Newspapers, Fiscal crisis is the new normal in Washington: Obama and Congress face an endless string of more doomsday deadlines to avoid hitting the debt limit or simply keep the government open.
The Washington Post, Renditions continue under Obama: The Obama administration has embraced rendition — the practice of holding and interrogating terrorism suspects in other countries without due process — despite widespread condemnation of the tactic in the years after the Sept. 11, 2001, attacks.
Yuval Levin says the left missed their best opportunity to raise taxes for a generation.
Ramesh Ponnuru on why the 41 to 1 tax hike to spending cut talking point is misleading.
Erick Erickson calls for A New Agenda.
The Heritage Foundation calls the Senate bill a $600 billion tax hike.
Ezra Klein on the lessons of the fiscal cliff.
Greg Sargent says fiscal deal leaves central question of Obama presidency unresolved.
Noam Scheiber isn’t sure the fiscal cliff deal was good for Democrats.