Home > Politics and the economy > Oh Boy: Over the Cliff We Go?

Oh Boy: Over the Cliff We Go?

from Peter Radford

No one knows exactly what went on, but this evening’s extraordinary melt down within the House Republican caucus is surely a historical moment.

Here’s the story:

Speaker Boehner has been negotiating a deal to resolve the so-called ‘fiscal cliff’ with President Obama. Set aside whether we think the economy has a debt or budget problem. It certainly has a manufactured fiscal policy problem. The reason the cliff is a rotten thing is that unless it dealt with it will induce a severe contraction in policy staring January 1st. The CBO forecasts a recession if we go over the cliff with GDP dropping by nearly 4.0% in the first quarter. 

Obama made an initial offer.

Boehner responded with a different package.

Obama counter-offered.

Thus far so good. A typical negotiation. Nothing odd.

But.

Then Boehner suddenly decided to go to the now infamous plan ‘B’. This was when things start to get weird. No one quite knows why he had to use plan ‘B’. It was radically different from anything in his negotiation with Obama. Indeed it was a major step backwards. The generally accepted explanation of Boehner’s somewhat strange maneuvering is that he was trying to test the extent of support for a deal – any deal – within his own caucus.

The problem with this is that plan ‘B’ is so far from a potential deal – it is basically a wish list of far right policies and represents a tax reduction for millionaires – that it will never be taken up by the Senate, let alone be signed into law. It was a sham from the get go.

And.

It failed to get sufficient support. The far right stood firm and blocked it. The consequence is that the Republican leadership decided not even to try to have it voted on. The Republican caucus has splintered. Recrimination is already in the air. As they left their private meeting Republicans muttered grimly, but avoided saying the obvious. As of this evening there is no coherent leadership in the GOP caucus. There is no possibility of a deal before year end. The Republicans have all gone home for the holidays. Quite whom Obama negotiates with now is anyone’s guess. Disarray. Chaos. And a historic public melt down.

Our political dysfunction has reached an epic level.

Our economy is about to take a massive self inflicted wound because of the intransigence of the far right.

Looks like we are headed over the cliff.

Oh boy.

Ah. But wait.

The obvious solution is for Obama to go back to square one. All he has to do is wait for January 1st. and then offer up his original deal: keep the Bush tax cuts for everyone with incomes under $250,000. This offer will fly through Congress. No one will be able to resist voting for what will be a tax cut. Of course this means that everything else the Republicans have been looking for will have to be negotiated later on with a president basking in the glow of a major tax cut.

It looks like they blew their negotiating position.

Oh boy.

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