Hit the Gas?
Hot Air has been nicely tracking the latest regressions on the Fiscal Cliff negotiations. I’m watching Fox Business this morning, where they’re worrying about what might happen even as they note that the market isn’t reacting at all. The market is either convinced that there are a few weeks left or it’s just hoping that any good news will bring it up high enough that the inevitable downfall will not suck so bad.
Before the election, I noted the following:
Sequestration and many of the tax hits from the Fiscal Cliff will happen. Honestly, if the current administration stays in power, it’ll be to a weakened position in congress. This administration is not known for reaching out for compromise. President Obama has no need to make a deal with congress when he can instead belittle them in the press, and blame them for failure. If the Obama administration is bounced, then the president will have even less reason to deal with congress, and he’ll leave it to Mr. Romney to fix. I do think one or two minor fixes to tax issues will happen, but random fixes will only serve to cause bigger problems.
I still hope I’m wrong, but it’s pretty clear that there’s no felt need to compromise with a weak Repbulican base, since they’ve proven in the past that they’ll do near-term tasks with a “deadline” that they have to meet later.
We’re starting to hear the right side of the aisle say that we’re better off just letting the country go off the cliff and that will force the left side back to the table. Charles Krauthammer is an example:
Republicans must stop acting like supplicants. If Obama so loves those Clinton rates, Republicans should say: Then go over the cliff and have them all.
And add: But if you want a Grand Bargain, then deal. If we give way on taxes, we want, in return, serious discretionary cuts, clearly spelled-out entitlement cuts, and real tax reform.
Otherwise, strap on your parachute, Mr. President. We’ll ride down together.
(Go read that whole opinion piece. It’s pretty good, obviously.)
I’ve been taught that strategic negotiation involves one of a couple concepts:
- Win-win: which means that everyone gets something. Settling for Win-Don’t Lose is not helpful, even if the “win” side believes that.
- Disagree and Commit: Someone has to lose, and it’s usually the side with less power, so make the call that you’ll enthusiastically support what you don’t like and work to make it happen.
- Agree to deal with the consequences: Know that what’s about to happen is not good, and plan for the inevitable.
It looks like the last option is now on the table (where the Dems though the middle one was the way to go, obviously). Of course, since I thought it was going to happen, the “plan for the inevitable” part has been pretty forward on my head these days. Can we survive a return to the cross-the-board Clinton-era tax rates and a hard cut in defense and a medium cut pretty much everywhere else?
The main problem with this is that we’re still not addressing entitlements. Doing all the budget cuts to the existing budget won’t help when well over half of the real spending is aiming towards Social Security, Medicare, Healthcare, and the like.
We’ll see if Congress and the White House can pull this out. You already know my prediction.
Updated 12/4: Via Hot Air, David Gergen is essentially saying the same thing… this is not a win-win scenario, it’s the D’s deciding that they can live with the consequences. I had a boss that asked a customer that once… the customer was going to put a rival out of business and was going to do it by completely re-setting the market. My boss wondered if the customer truly understood what they were doing, and they assured him they had it in had. I’d note that the customer so horked the market that they eventually got bought out by a rival…