Monday, November 26, 2012

Yup, I'm Down With Going Over The Fiscal Cliff

As the pundits and partisans hand-wring about what will happen if the United States falls off of the so-called fiscal cliff, I am coming around to this position.
I am down with going over the fiscal cliff.
Now I am not at this decision lightly.
Without a doubt, the Republicans will be blamed if this does indeed occur. And even if a known to be horrible compromise is somehow hatched-up, Republicans who accede to Democrat demands will not be given a free ride.
Ask then-President George H. W. Bush when he collapsed under Democrat pressure and broke the no-new taxes pledge. Did he get credit for "being an adult" or any of the other Washington Beltway euphemisms? Noooo! He got hammered for raising taxes by none other than William Jefferson Blythe Clinton. in the 1992 presidential campaign. Yeah, a lot of good it did Mr. Bush who lost reelection that year.
That is what will happen to any Republican that continues to entertain giving any quarter to the Democrat demands, which will lead to tax hikes.
So, what will happen if no deal is reached and then we go over the fiscal cliff?
The immediate that happens as of January 1, 2013 will be what is called sequestration. It essentially will be a combination of budget cuts and tax hikes.
Now, I link Marc Thiessen (too bad he does not spell Mark correctly!) because it is a useful guide to exactly what happens.
And here are the tax highlights Mr. Thiessen alludes to:

●The employee share of the Social Security payroll tax would rise from 4.2 percent to 6.2 percent.

●An estimated 33 million taxpayers — many in high-tax blue states — would be required to pay the alternative minimum tax, up from 4 million who owed it in 2011.

●The child tax credit would be cut in half, from $1,000 today to $500, and would no longer be refundable for most.

●Tax preferences for alternative fuels, community development and other Democratic priorities would go away.

●And the expansions of the earned income tax credit and the dependent care credit would disappear as well.

Now what Mr. Thiessen does not discuss and is very real about the actual budget cuts is what will happen to the defense budget. It will take the largest hit if indeed budget cuts have to be implemented once the United States falls off the cliff.
But what is in it for the long run for those of us that want to pursue real tax reform and entitlement reform?
Well, I can not say it better than Mr. Thiessen does right here:

Americans had a choice this November, and they voted for bigger government. Rather shielding voters from the consequences of their decisions, let them pay for it.

And therein lie why the Republicans need to let the United States fall off that fiscal cliff.
Because the reality is that the people that did vote for the Dear Leader, President Obama, and Democrats need to come to an understanding.
That big government actually costs real money. And that real money is the taxes that the government will collect from more Americans to pay for such things as the so-called "stimulus" that currently Red China is paying for. And of course there is Obamacare.
See, the Democrats really want people to believe that only wealthy people, whatever they define as wealthy, should have to shoulder the burden of taxes and not all taxpayer need to be part of paying taxes in the first place.
The problem is, there are just not that many wealthy people unless you lower the wealth bar pretty low. The way that Democrats have figured, about $200,000 for individuals and $250,000 for a married couple and or household.
And at some point, the Democrats will realize, damn, why that is not enough and wealthy, well, lets see, maybe lets make that $150,000 or individuals and $200,000 for married couples and families. It thus becomes a game of drip, drip, drip until the bar is so lowered that well what Mr. Thiessen describes as the taxes going up happens in one fell swoop.
The problem is that if the Republicans get caught up in some moronic "Grand Bargain" to avoid the fiscal cliff, they will not have any position of strength to fight for serious tax reform let alone entitlement reform.
In other words, real pain must occur before real reform can be negotiated and achieved.
And it is why Republicans need to not try for some deal to avoid the fiscal cliff. We must drive the car right off of it and lay the blame where it belongs-with the Democrats-and then negotiate from a position of strength.

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