Senate passes bad "fiscal cliff" deal. So is it time to give up on President Obama?

By Michael J.W. Stickings

To begin, let me put it this way: There are good things and bad things about the fiscal cliff deal the Senate passed today, including:

The good: Tax rates for the wealthy go back to Clinton-era levels; federal unemployment insurance is extended for another year; and certain tax breaks for low-income Americans are extended for five years. (And, as Krugman notes: "no giveaway on Social Security, Medicare, or Medicaid. Basically, no spending cuts at all." That's huge.)

The bad: The threshold for the new/old tax rates is set at $450,000 for families and $400,000 for individuals, much higher than the $250,000 threshold Obama and the Democrats had initially sought; nothing is done about the debt ceiling, and so the Republicans can continue to use it to hold the political process and the economy hostage; the threshold for the 40 percent estate tax is set at the same level as that for income tax, which is very high, and it's also tied to inflation, which Republicans wanted, and sequestration is put off for just two months, meaning we'll be back in this whole fiscal mess sooner rather than later.

It seems like a bad deal to me, one that requires Obama and the Democrats to give up way too much to the Republicans just to get something, anything done. And it seems like they're willing to give it up without much of a fight.

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The case for cliff diving

By Frank Moraes

Noam Scheiber over at The New Republic makes the case: "To Save His Second Term, Obama Must Go Over the Fiscal Cliff." He counters the standard thinking that while it may be tactically smart to go over the Fiscal Cliff, it is bad strategy. He quotes a number of people who argue that if Obama wins this fight, he will so anger the Republicans that he won't be able to get anything done for the next two years. Scheiber calls this for the nonsense that it is.

Anyone who reads me with any regularity know that I don't buy any of this talk about honor among politicians. In fact, I've been defending the Republicans for their intransigence. Politics is about getting power to enact the policies that you favor. That's why there are two political parties: because they disagree. That's why we work to win elections. Bipartisanship doesn't make any sense as an end in itself. It only works when each side thinks the trade offs are worth while. We could have a deal where the top tax rate goes up to 99% and we end Medicare and Social Security. That would be bipartisan: both parties would hate it. But both sides would be giving up something that's important to them! So it must be good, right?
 
Scheiber says there are currently two kinds of Republicans in Congress: "moderately delusional and the utterly, irreconcilably delusional." The moderately delusional are those who understand that the tax fight cannot be won. The irreconcilably delusional are the ones who think that with a stiff upper lib and a song in your heart, all things are possible. They aren't. But as Scheiber notes, even the moderately delusional crowd is wrong: why would Obama take a 37% top tax bracket when he automatically gets a 39.6% top tax bracket by doing nothing at all?

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