President Barack Obama’s persistence has managed to smoke out House Speaker John Boehner and the Republicans. Their just-announced plan for cutting the deficit is what we suspected: cuts in Medicare and Social Security; no higher tax rates on the rich; limits on tax deductions that would hit the middle class as well as the wealthy, but only raise half the revenue of Obama’s plan; and a lot of fudging with numbers.
The Republicans might as well be parading around with a sign that reads “Kick Me.” None of this stuff solves the real problem of getting a recovery going. If you believe that deficit reduction is required, it doesn’t even solve that. And the plan cuts into social insurance programs that are hugely popular, while Obama defends them.
Best of all, the corporate deficit hawks marching under the banner “Fix the Debt” are left out in the cold. Nobody is emphasizing austerity as an economic cure. Corporate Democrat Erskine Bowles is yesterday’s news (sit down, please), almost as irrelevant as Republican tax-scold Grover Norquist.
Please allow me a small gloat: These plutocrats behind Fix the Debt, all of whom will be hit in the pocketbook with higher rates, have spent more than $60 million of mostly shareholder money to buy this debate. Their lack of influence per dollar spent puts them almost in the Sheldon Adelson class. But I digress.
So what happens now?
Round 1: The Republicans kick and scream, but the more the public grasps what their game really is, the more they lose public support. They gradually come around to the realization that rates on the richest 2 percent have to rise.
Round 2: No grand bargain is reached by New Year's Eve, and the budget briefly goes off the cliff, meaning that automatic tax hikes go into effect for everyone as the Bush tax cuts expire. Automatic spending cuts also kick in. The Congressional Budget Office issues dire warnings. The Dow loses a thousand points. The Wall Street Journal runs a black-bordered editorial.
Round 3: Obama calls on Congress to extend the Bush tax rates on the bottom 98 percent and extend the deadline for debating the rest of the issues. After great agony, the Republicans cave.
The fiscal-cliff strategy, of holding the economy hostage to force the Democrats to cut Social Security, Medicare, and Medicaid and raise taxes on the middle class to protect tax cuts for the rich, fails. It fails because Obama grew a spine. And it backfires by making crystal clear who the Republicans really serve and whose interests they would sacrifice.
Or at least, that’s what will happen if our president hangs tough.
This is the season of gift-giving, miracles, and prayer. Let’s pray for this gift.