A friend of mine sent me a copy of an article from The Economist, “The Republicans are playing a cynical political game with hugely high economic stakes”. Just four paragraphs is all we need to look at; you can follow the link to make sure I’m not ruining the analysis with an out-of-context fallacy:
The House of Representatives, under Republican control as a result of last November’s mid-term elections, has balked at passing the necessary bill. That is perfectly reasonable: until recently the Republicans had been exercising their clear electoral mandate to hold the government of Barack Obama to account, insisting that they will not permit a higher debt ceiling until agreement is reached on wrenching cuts to public spending. Until they started to play hardball in this way, Mr Obama had been deplorably insouciant about the medium-term picture, repeatedly failing in his budgets and his state-of-the-union speeches to offer any path to a sustainable deficit. Under heavy Republican pressure, he has been forced to rethink. …The sticking-point is not on the spending side. It is because the vast majority of Republicans, driven on by the wilder-eyed members of their party and the cacophony of conservative media, are clinging to the position that not a single cent of deficit reduction must come from a higher tax take. This is economically illiterate and disgracefully cynical.[The Economist] has a strong dislike of big government; we have long argued that the main way to right America’s finances is through spending cuts. But you cannot get there without any tax rises. In Britain, for instance, the coalition government aims to tame its deficit with a 3:1 ratio of cuts to hikes. America’s tax take is at its lowest level for decades: even Ronald Reagan raised taxes when he needed to do so.And the closer you look, the more unprincipled the Republicans look. Earlier this year House Republicans produced a report noting that an 85%-15% split between spending cuts and tax rises was the average for successful fiscal consolidations, according to historical evidence. The White House is offering an 83%-17% split (hardly a huge distance) and a promise that none of the revenue increase will come from higher marginal rates, only from eliminating loopholes. If the Republicans were real tax reformers, they would seize this offer.
House Republicans have used the rhetoric of raising taxes on “Americans”. However, the loopholes the Obama Administration wants to close would only affect those in the top tax bracket, and would go a long way towards the reform the Republicans say they want.
Let’s face it, folks, while Republicans have scorned the White House’s “reckless spending spree”, a good chunk of the $14.3 trillion national debt preceded Barack Obama’s inauguration, from two overseas wars and a couple of bailout packages for “too big to fail” industries … expenses the Republicans approved when Dubya was in office.
Now the Republicans are trapped by their rhetoric and their voter base into standing firm on a “no new taxes” pledge that’s just plain silly, and of a type that not only Reagan but Bush père reneged on. Moreover, it looks increasingly to me as if it had always been their plan to stick the Democrats with the onus of raising taxes, and have suddenly realized that owning the House of Representatives right now takes that legerdemain out of play.
Read my lips: Any way you slice it, a political disaster is in the making for the GOP unless they give in on closing the loopholes. Their position isn’t so firm they can afford to be stubborn on the matter.