Wednesday, November 28, 2012

Mr. President, About That Alleged 'Fiscal Cliff'...

Over the Fiscal Cliff
... here's some advice from Robert Reich: let the automatic tax restorations take effect, then pressure Congress to restore ONLY the lower- and middle-class tax cuts, allowing pre-Bush-era taxes to settle again on the very wealthy. The mechanism is already in place; indeed, it's automatic if Congress does nothing before 1/1. It's true that Repub's could refuse to restore any tax cuts unless they can restore those for the wealthy, but that's bound to be a politically untenable position for them.

Will it work? Reich calls it "bungee-jumping over the fiscal cliff," and describes it as follows:

Obama’s only real bargaining leverage comes from the fact that when the Bush tax cuts expire at the end of December, America’s wealthiest will take the biggest hit. The highest marginal income tax rate will rise from 35 to 39.6 percent (for joint filers), and the capital gains rate from 15 to 20 percent.

This will happen automatically if nothing is done between now and then to change course. It’s the default if Republicans won’t agree to anything else. It’s Obama’s trump card.

So rather than stoking middle-class fears about the cliff, the White House ought to be doing the opposite – reassuring most Americans they can survive the fall. To utilize his trump card effectively, Obama needs to convince Republicans that the middle class is willing to jump.

It's time Obama took advantage of a manifestly strong position. Next year will be too late. Do it now, Mr. President!

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