With all the moaning coming from the Tea Party Express and its loyalists in the House Republican caucus, you would think conservatives had lost everything, including their virtue, in the “fiscal cliff” parlay with President Obama, because taxes are going up on the wealthy. However, if they could just get past their prudish sensibility about backroom compromises, they might recognize that their side actually did rather well in the dead-of-night deal-making.
Yes, Democrats can claim some good results in the last-minute bargain that was struck to avoid the immediate across-the-board tax hikes and budget cuts that were set to begin on Jan. 1. The George W. Bush-era tax cuts for people making more than $400,000 a year were eliminated and capital gains taxes and estate taxes were raised, providing new revenue sources that Democrats insist are necessary. Those are significant wins for the president and his party, and forcing Republicans to let these higher tax brackets go through is a satisfying symbolic victory.
But the mandarin of the anti-tax movement, Grover Norquist, is coming out of this showdown with a big smile on his face, which should make Democrats wonder if their “victory” is a bit of an illusion.
Norquist has kept Republicans in line for years by making them take his pledge to never, ever raise taxes. On this deal, though, he gave them a pass. In fact, he expressed support for the final deal. Why? Because, as he points out, it gives Republicans what they have claimed to want ever since they implemented the tax cuts a decade ago: permanence. Not for everybody -- the top 2% of Americans will be paying more -- but 98% of taxpayers now have their tax breaks locked in.
Weirdly, Democrats are cheering about this while Republicans are complaining. Ten years ago, Democrats insisted on making the tax cuts temporary because they said the revenue loss would be so huge it would send the deficit soaring. Republicans at the time expressed faith in the unproven idea that tax cuts were such a boost to the economy that they paid for themselves.
Now, that unproven idea has been proved wrong, but that did not keep Obama from making most of the tax cuts permanent, as Republicans desired all along. Brazenly, many Republicans are now the ones saying these tax cuts for the middle class need to be paid for with budget cuts, lest they balloon the deficit. They will take that argument into the next phase of the budget battle, and they will argue, additionally, that, because Democrats already got the revenue they demanded, it is time for big spending cuts to bring down the deficits and debt.
Many liberals are insisting that Obama settled too quickly and, now that he has used up his advantage on taxes without making a broader deal that pinned down what will and will not happen with spending reductions, the Republicans have gained the upper hand. The president insists that he will hang tough and will not let the other side force changes in Medicare and Social Security funding by using the looming deadline to raise the debt ceiling as leverage.
The fiscal cliff fight was just the opening round in a bigger budget slugfest that will play out over the next two months. Conservatives may think their bloodied lip is a sign they lost that first round, but, in truth, they may already be ahead on points.