Fiscal slope talks have basically stalled out, but leader in the conservative movement Jim DeMint cried uncle this morning, affirming that the President will get higher taxes, though he exaggerated it to mean higher taxes on everyone, not just on those earning over $250,000.
“He’s going to get his wish,” DeMint said. “I believe we’re going to be raising taxes and not just on the top earners.”
The conservative senator said that Obama had the upper hand because he wanted the automatic tax hikes and spending cuts to go into effect on Jan. 1 (a common refrain among Republicans).
“It’s hard to work with someone who is intentionally trying to take us over this cliff,” DeMint said. “The president’s proposal is not a plan, it’s not a solution.” Rather, he said, it’s “a political trophy.”
Right, this is now how conservatives characterize the use of leverage by the White House, as a trophy. They’re trying to portray Obama as intransigent on the tax issue, although all polls show his position to be quite popular and Republicans holding out for tax breaks for the top 2% to be offensive.
It’s looking more and more like House Republicans will play the “retreat to higher ground” strategy, by going ahead and passing the Senate tax bill, with its extension of the Bush-era tax rates on the top $250,000 of income, as well as increases in capital gains rates, patching of the alternative minimum tax and the extension of three stimulus-era tax breaks for the middle class and working poor. But that’s as far as they’ll go. The sequester will probably take effect initially, no stimulus measures like the payroll tax cut or unemployment insurance will be extended, it’s unclear what will happen to Medicare reimbursement rates in absence of a “doc fix,” and the country will continue to hurtle toward the debt limit. Republicans clearly feel they have leverage in that alternate scenario, if they get tax rates out of the way, to accomplish whatever evisceration of the safety net they prefer.
To that end, a group of Democratic lawmakers wants the President to defuse the debt limit time bomb.
Rep. Peter Welch (D-VT) is circulating among colleagues a letter to President Obama, to affirm their support for his no-hostage strategy — and beyond that for him using extraordinary means to prevent the U.S. from defaulting on its debt obligations.
“We fully support your view that Congress should not ‘play this game,’” the letter reads. “Threatening default on our nation’s debt is an economic weapon of mass destruction that will have immediate and catastrophic consequences for the economy as well as America’s standing in the world. In the event the Speaker follows through on his reckless threat, we would support your use of any authority available to you, including the 14th amendment, to preserve America’s full faith and credit and prevent further damage to our economy.”
Welch has just begun circulating his letter, and has thus far gathered a dozen signatures.
Invoking the 14th Amendment is actually further than the White House has signaled they would go, but you really never know what will happen in the moment, when faced with the first default in the history of the United States. There are other options if you don’t want to play the game, including what would amount to a government shutdown a la 1995, where the White House only pays for what it can out of current funds and shuts down everything else, blaming Republicans in the process. It’s a high-risk strategy, but it’s hard to see another avenue, if the Constitutional one has been shut off.