POLITICS

Morning Examiner: The Republican cave in begins

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Politics,Beltway Confidential,Conn Carroll

Well, that was fast. After spending all weekend telling anyone who would listen that President Obama’s $1.6 trillion tax hike fiscal cliff offer was laughably unserious, Republicans immediately legitimized Obama’s offer Monday by countering with an $800 billion tax hike offer originally outlined in super committee testimony by President Clinton’s Chief of Staff Erskine Bowles.

RedState‘s Daniel Horowitz explains Negotiating 101 to House Republicans: “First, when you begin negotiations agreeing to 60% of the demands of the other side and fail to offer a bold contrast on the other 40%, you are headed for an outcome that is 80-90% favorable to your opponent. Second, when you need to outsource your budget plan and entire view of government to Democrat Erskine Bowles, you are relegating yourself and your party to irrelevancy.”

And if Republicans were hoping that Bowles would provide them with some bipartisan cover for their new pro-tax hike position, Bowles quickly dashed those hopes with a statement Monday: “In my testimony before the Joint Select Committee on Deficit Reduction, I simply took the mid-point of the public offers put forward during the negotiations to demonstrate where I thought a deal could be reached at that time. The Joint Select Committee failed to reach a deal, and circumstances have changed since then. It is up to negotiators to figure out where the middle ground is today.”

Translation: Thanks for caving Republicans but you are going to have to cave some more.

The Heritage Foundation’s Director of Economic Policy Studies Alison Acosta Fraser was even more harsh: “Beyond disappointing, the House Republican counteroffer appears at best to suggest incremental tweaks to [entitlement] programs. Without real entitlement reform—not just spending cuts—we will never fix the underlying problem. … In exchange for these incremental tweaks to spending, the Republican plan offers up what it calls “revenue through tax reform.” One hopes this means revenue arising from the additional economic growth that would pour forth from pro-growth tax reform. However, references to the Bowles plan suggest … an anti-tax reform program of reductions in the availability of certain deductions and exemptions—without offsetting reductions in rates. While preferable in general to raising tax rates, this proposal largely dooms future efforts at tax reform based on the sound principle of broadening the tax base to lower the rates. Instead, this proposal would broaden the base, not to lower rates, but to raise revenues. So much for improved economic growth.”

House Republicans are in a tough spot. Their negotiating position is weak. Everyone knows this. That is why it is so important to limit the breadth of an eventual fiscal cliff deal as much as possible. If House Republicans still believe that real tax reform (broadening the base and lowering rates) and structural entitlement reform are the keys to future prosperity, they must not sign on to a deal that undermines those long-term goals. But that is exactly what yesterday’s Republican offer would do.

From The Washington Examiner
Examiner Editorial: Obamacare’s new tax on health insurance
Mark Tapscott: Fed up with ‘fiscal cliff’ BS? Bring on those C-SPAN cameras
Byron York: How GOP can turn the tables on Obama on spending
Phil Klein: Boehner embraces Erskine Bowles’ ‘middle ground’ approach
Tim Carney: Who’s trying to keep liquor out of supermarkets? The liquor stores, of course

In Other News
The Washington Post, AARP lobbies against Medicare changes that could hurt its bottom line: AARP, the highly influential lobby for older Americans, is fiercely opposing any Medicare or Social Security cuts and emphasizes that it is fighting for the good of its members. But the proposals for changing Medicare also could affect AARP’s bottom line.
McClatchy News, Big business vs. small at edge of fiscal cliff: Big business and small business have very different views on whether changes to personal income taxes or corporate taxes should be part of the fix. Many small businesses declare their business income through their personal income taxes, and they are staring at the possibility of higher tax rates on the top tiers of personal income. Yet big corporations would be unaffected by higher tax rates since they pay corporate income taxes, not personal.
The Wall Street Journal, GM Moves to Reduce Inventory: General Motors workers at its Lordstown, Ohio, assembly plant soon will be off the job for three weeks instead of a planned two-week Christmas shutdown as the Detroit auto maker curtails Chevrolet Cruze output.
The Detroit News, Right-to-work bill gets Michigan Chamber’s support: The Michigan Chamber of Commerce on Monday threw its political weight behind passage of a right-to-work law, adding pressure on Republican lawmakers to deliver a blow to organized labor before year’s end. Republicans lawmakers were still discussing whether to pursue a right-to-work bill late Monday,
The Los Angeles Times, State lacks strategy on alternative energy, report says: California’s push to add wind and solar energy to its existing power grid could saddle ratepayers with soaring electrical bills and despoil the state’s environmental resources.
The New York Times, Assad Suffering Reversals in Fighting and Diplomacy: As Washington debates whether to cut federal retirement programs as part of a deal to tackle the nation’s debt, one of the most powerful advocates for preserving them could have millions of dollars riding on the outcome.

Righty Playbook
Mona Charen on what the fiscal cliff debate is really all about.
In response to Boehner’s purge of conservatives from key committees, Erick Erickson urges conservatives “to find quality candidates to challenge incumbent Republicans.”
James Pethokoukis explains why cranking up taxes on capital gains and dividends is a real clunker of an idea.

Lefty Playbook
The American Prospect details A Strategic Plan for Liberals
Mike Konczal urges liberals to come out Against the Coupon State.
Jamelle Bouie explains why it might be better for liberals to kick the can down the road on the fiscal cliff.

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