Everyone said Congress would go to the brink of the fiscal cliff before agreeing on a last-minute compromise that would avert the worst consequences of inaction, and that is what happened. It was clear all along that the drama of negotiations under a self-imposed sword of Damocles was a charade devised for political reasons and far removed from rational lawmaking.
There is something for everyone to be disgusted with in the bill that emerged. Dairy farmers were among those outraged by Congress’ methods. Instead of passing the five-year farm bill, which had been approved by the Senate and the House Agriculture Committee, Congress extended present farm law, which killed dairy reforms that would have helped dairy farmers, and provided a boon to monopoly processors such as Dean Foods.
Rich people will have to pay more in income and capital gains taxes, which helps to ease the federal deficit in a modest way and to redress growing economic inequality. But working people will have to pay higher payroll taxes because the payroll tax cut that was part of President Obama’s stimulus program was not renewed. Meanwhile, the long-term challenge of addressing the cost of federal social insurance programs — Medicare, Medicaid and Social Security — was left for another day.
Also left for another day was the problem of the debt ceiling, which will have to be raised in a couple of months and which Republicans have employed as a weapon to gouge out further cuts in federal spending. Obama let it be known that he was not going to succumb to Republican blackmail over the debt ceiling. It is Congress’ job to approve the money to pay the bills it has incurred, he said. He would not play games with the creditworthiness of the United States.
But there is much still to be decided, which leaves the onlooker with a sense of dread. And yet it needn’t be that way.
In a rational world, members of Congress would sit down and reason together. What do we need for the Pentagon? What do we need for health care and how can we save? What do we need to support farmers (rather than monopolist middle men)? What do we need for disaster relief?
Instead of a rational process, Congress has become habituated to a pattern of power politics, whereby the overriding issue for Republicans is how to cut — irrespective of the need. Given Republican intransigence, the overriding issue for Democrats is how to protect programs from cuts. Thus, reasonable modifications to Social Security or Medicare have a hard time winning Democratic adherents because Democrats have become convinced they must defend those programs at all costs against Republican attack.
Perhaps the most noteworthy circumstance surrounding the fiscal cliff was the fact that a significant minority of Republicans broke with orthodoxy and voted for a bill that included tax increases. One reason for the charade at the New Year’s deadline was to create sufficient pressure that Republicans could say that, though they held out to the last, they had no choice. That charade requires them to hold out to the last.
Some liberals, meanwhile, complained that Obama had surrendered too much in compromising with Republicans. Previously, Obama has been too willing to make concessions, but this time he realized that waiting to the last minute was part of the game and that if he did so he would not have to sell out the people too egregiously. As a result, the Democrats got some of what they wanted.
Now the Democrats face a fractured Republican Party, the leadership of which is learning that to participate in the governing process it must learn to stiff the radical elements of the tea party. Thus, the winning coalition that pushed through the fiscal cliff-averting bill, comprising most Democrats and a minority of Republicans, is likely to be the coalition that prevails in the coming months. Muddling through may be all that such a coalition is capable of, though we can hope that shrewd leadership can find a way toward the large-scale reforms that are still needed on taxes, entitlements, defense, immigration, guns and other issues.
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