The #FiscalCliff deal: What to like about it, and what to hate about it

The Washington Examiner’s Philip Klein on the “good, bad, and ugly” about the fiscal cliff deal that will soon reach the President’s desk to be signed into law:

Conservatives believe that higher taxes are a bad thing, that the tax code needs to be dramatically overhauled and that the true driver of long-term debt is out of control spending, particularly on entitlements. For those who thought it was possible to emerge from the “fiscal cliff” showdown without tax increases, with genuine tax reform and with real spending cuts that made fundamental changes to entitlements, this deal is obviously a nonstarter.

For those who assumed that President Obama’s reelection and continued Democratic control of the Senate at a time when the nation was facing an automatic $4.5 trillion tax hike would inevitably mean higher taxes without actual tax or entitlement reforms, the deal is less bad. As the House considers the legislation today [now passed – ST], I thought it would be worth assessing the good, the bad and the ugly of the “fiscal cliff” deal.

The Good

At the start of 2013, income taxes were scheduled to go up on nearly every American, but if this deal becomes law, roughly 99 percent of taxpayers would be protected from those tax hikes. For over a decade, Democrats opposed the Bush tax cuts and prevented them from becoming permanent. Now, they have voted overwhelmingly to preserve about 84 percent of the dreaded cuts, which for years they demagogued as only benefitting the very rich.

Lawmakers also agreed on permanent changes that minimized the tax increases on estates and capital gains. In addition, the deal permanently prevented the Alternative Minimum Tax (originally passed in 1969 to capture a small number of rich households who were avoiding taxes) from hitting tens and millions of Americans. From a more technical standpoint, this also means that the deal locks in a Congressional Budget Office revenue baseline that will be as low as possible. So, if future Republicans propose real tax reform, we won’t end up with estimates saying that their proposals would cost trillions of dollars, because such proposals will no longer be judged against an unrealistic baseline that assumes all of the Bush tax cuts would otherwise expire and open the floodgates to new revenue.

A less publicized but still significant positive from the deal is that it formally repeals the CLASS Act, a long-term care entitlement that is part of Obama’s national health care law. Originally the brain child of the late Sen. Ted Kennedy, the program was slated to collect years of premiums before paying out any benefits, so Democrats cynically exploited this fact to claim twice as much deficit reduction through Obamacare as existed in reality. The Obama administration has already suspended implementation of the CLASS Act after conceding it is unworkable. But it still remains on the books, waiting to be reinstated at some point in the future. The fiscal cliff deal would put a stake through the heart of this program once and for all.

Read the rest for the “bad and the ugly.” And a lot of it is indeed bad and ugly.

The deal has understandably been dubbed a “crap sandwich” by many staunch conservatives who are very disappointed in the GOP House and Senate leadership for what they believe to be “caving” to Obama and Senate Democrats when it comes to raising taxes while at the same time not touching entitlement spending. Other staunch conservatives like yours truly also believe the fiscal cliff “deal” is indeed more or less a “crap sandwich”, but was also one GOP leadership in both chambers didn’t have much choice on in the 11th hour of negotiations, for sad but true reasons National Review Online’s Jim Geraghty explained well in his Morning Jolt newsletter from today (bolded emphasis added by me):

There’s a lot of anger, frustration, and disgust building in the righty grassroots in the past few weeks. Over the past week I saw a lot of comments on Twitter in the vein of “we have a spending problem! Why won’t Republicans insist we deal with that first!”

Fume at Speaker Boehner and Senate Minority Leader Mitch McConnell all you want, but here’s the problem: The chance to gain leverage in these negotiations was on Election Day, and the GOP came up with bubkes that day. Sequestration and the expiration of all of the Bush tax cuts presented an awful status quo to begin with, and there was really no better alternative that would get A) passed in a Senate controlled by Harry Reid and B) signed by President Obama. They don’t want what we want, and we don’t want what they want. And time was on their side in several ways, not least of which was that as of noon Thursday, a new Congress, with even more Democrats, is sworn into office.

There was and is no magic argument, anecdote, policy detail, or chart that could change that dynamic. What was worse — or perhaps, if you look at it a certain way, liberating — was that Republicans were and are just about certain to get the blame from most of the public for either the failure to reach a deal or for the unpopular parts of any deal reached. Some of this is because of the power of the presidential bully pulpit, and some of this reflects people’s enthusiasm for taxing somebody making more money than they do. But a lot of this dynamic is because a large segment of the public just doesn’t pay attention to budget fights and doesn’t want to pay attention to budget fights. So no matter what the numbers actually say, they’re inclined to blame the party they already consider to be the problem.

The bolded lines above can’t be emphasized enough. I primarily blame the mainstream media for every article written and every word uttered that insinuated or outright stated in one form or other that rising taxes on the middle class in the new year would be the “fault of the GOP members of Congress” if a deal wasn’t reached – when the House had already done its part ages ago, and when the Senate had and has stalled any House attempt at avoiding the exact scenario that would play out at the end of 2012. The damned Democrat Senate leadership, under demagogue Harry Reid, knew the “blame the GOP” narrative would play out to perfection courtesy of their banging the drum about how the GOP were allegedly being “obstructionist”, which of course their allies in the MSM picked up and successfully ran with. Not much of anything on Senate Democrats and their refusal to work with the House GOP. As a result – and Reid knew this would happen – the GOP would feel their backs up against the wall to compromise or if not, as Geraghty notes, lose what little political capital they have over something that, in reality, was the fault of Senate Democrats and our clueless celebrity President. Where has the MSM been when it comes to calling Senate Democrats to the carpet for their failure to pass a budget in over 3 years, and for their repeated attempts at stalling any House GOP attempts at avoiding a “fiscal cliff” showdown? They’ve been here: As usual, in the back pockets of Democrats, essentially being their puppets in painting the GOP as being the party who wants to “raise taxes”!

Now that this “deal” is out of the way, expect more big ideological battles ahead that the House and Senate GOP leadership must stay on the right side of – the fierce debate over spending cuts and raising the debt ceiling. Expect these battles to be especially bitter, considering how the two sides ripped each other to shreds during the negotiation process on the “fiscal cliff deal.” In particular, there is no love lost between Boehner and Reid, and I wouldn’t be surprised to see their animosity towards each other blow up in a very public way in the coming weeks.

The key for the GOP is to get AHEAD in the messaging war ON ALL FRONTS on this going forward as they can’t continue to allow the Democrats and their press pals to control the narrative in a way that puts the blame on the wrong side when it comes to wanting to combat this crisis in a meaningful way by having to make tough but crucial, critical choices on the issue of spending and entitlement reforms and taxes.

As they say, stay tuned.

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