Winning the Battle of the Fiscal Cliff

Alan Reynolds
Sun, 18 Nov 2012 21:00:00 -0800
Opinion

President Obama has succeeded in making the fiscal cliff debate about whether or not the Republicans will agree to higher taxes on the "wealthy." We need to switch the debate to whether or not the Democrats will accept cuts in spending.

To do so, Speaker John Boehner should insist on a ratio of spending cuts to tax increases (or revenue enhancements as he calls them) of at least 3:1. Then, he should tell the president that after the Chief Executive provides a list of spending cuts — apart from the defense budget — that he will propose a proportionate range of revenue increases.

By insisting on a ratio, and demanding that Obama put up his share before Boehner does his part, the speaker puts the onus where it belongs: on Obama to produce spending cuts. In effect, the speaker can say: "The size of the revenue increase is up to you, Mr. President. For each three dollars you identify in real spending reductions, we'll propose one dollar of tax increases. The more you cut, the larger the increase will be."
Updated: Tue Nov 24, 2015

President Obama has succeeded in making the fiscal cliff debate about whether or not the Republicans will agree to higher taxes on the "wealthy." We need to switch the debate to whether or not the Democrats will accept cuts in spending.

To do so, Speaker John Boehner should insist on a ratio of spending cuts to tax increases (or revenue enhancements as he calls them) of at least 3:1. Then, he should tell the president that after the Chief Executive provides a list of spending cuts — apart from the defense budget — that he will propose a proportionate range of revenue increases.

By insisting on a ratio, and demanding that Obama put up his share before Boehner does his part, the speaker puts the onus where it belongs: on Obama to produce spending cuts. In effect, the speaker can say: "The size of the revenue increase is up to you, Mr. President. For each three dollars you identify in real spending reductions, we'll propose one dollar of tax increases. The more you cut, the larger the increase will be."

Boehner must insist that spending cuts focus on welfare entitlements. As Grover Norquist points out, past deals which involve ratios between spending and tax cuts — a la Bush-41 — never work out. The spending cuts are usually in the discretionary budget. Even when they are made, they are often offset by increases in entitlement payments. Some even venture that the tax increases cause an increase in means tested entitlements by slowing down the economy and generating more unemployment.

We must realize that the spending increases and excesses of the Obama years have been concentrated in two sectors of the six parts of the federal budget. While defense, Medicare, Social Security and debt service budgets have risen only slightly, means-tested entitlements, like Medicaid, food stamps, welfare, rent subsidies, nutrition programs and such, have increased dramatically. The sixth part of the budget, non-defense discretionary spending, had also risen dramatically, but was reduced somewhat by the debt limit deal of the summer of 2011.

It is only by shifting the focus to spending cuts that we can win the battle of the fiscal cliff. And it is only by zeroing in on spending cuts that Boehner can maintain a semblance of party unity in the House.

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