1:44 am CST - December 29, 2012
Posted under On The Record
Texas Insider Report: WASHINGTON, D.C. — Senate Republicans are in the minority, but that doesn’t mean they must be mute on the Fiscal Cliff. They can gain political leverage by publicly condemning Harry Reid for failing to act on the fiscal cliff when the House has already done so. Indeed, they can bring much needed attention to this point by calling on Harry Reid to resign for failing to act, and Senate Finance Committee Chairman Max Baucus, too. Yes, that will stir big controversy, because that would involve Republicans fighting back, as Democrats would do if the tables were turned.
That is how the argument gets in the news.
Republicans will get a better deal if they stop negotiating behind closed White House doors and force the Senate to vote on a plan. In other words, if they follow the Constitution.
Remember your high school civics, when your teacher explained the process for passing federal legislation in Washington?
First the Speaker of the House goes to ask permission to pass proposed legislation from the Emperor in the White House. If the Speaker does not get the Emperor’s approval before trying to pass a bill, then he is just wasting everyone’s time. Further, if the Senate does not agree with what the House has passed, the Senate Majority Leader can just say the magic incantation, “Dead on Arrival,” and the Speaker of the House skips town.
Wait — that’s not what the Constitution says. It says that tax legislation begins in the House. And the bottom line is that the House has already acted to avoid the fiscal cliff. Last Friday before the holiday break, the House did pass alternative spending cuts to replace the defense sequester. Further, in August, the House passed legislation to extend all of the Bush tax cuts for everybody.
Because we live in a low information society with mainstream media that refuse to report on anything that is not consistent with the Democrat party line, the House should act today to pass again that extension of all the Bush tax cuts for everyone. With public focus on the impending fiscal cliff, it will be impossible for partisan journalists to hide that development from the American people.
But either way, the bottom line is that the House has fully acted to avoid the fiscal cliff. The next step under the Constitution is for the Senate to pass its own bill encompassing what it prefers. If it disagrees with the House bill, both bills to go to conference committee, which is where the final negotiations and compromises between he two chambers occur.
Thus, if President Obama and the Democrats disagree with the House’s tax policy and spending cuts, then their job is to pass what they want through the Democrat-controlled Senate. It is not for President Obama and Harry Reid to hold press conferences, laugh at the Republicans, and then go back to sleep.
That is not leadership. That is political posturing.
A Better Deal
The above Constitutional process is what Grover Norquist has been calling for on the fiscal cliff from the beginning. Grover’s essential insight from the beginning is that conservatives will get a much better deal on the floor of the U.S. Senate, and in a conference committee, than they will negotiating behind closed doors at the White House.
In the legislative process, elected Congressional Democrats have to put their careers on the line in recorded votes, for which they can be held politically accountable.
Enough Congressional Democrats know that Obama’s tax increases would — even with CBO’s method of scoring — raise only a pittance to address the yawning fiscal gaps that five years of wild, reckless, ultraliberal Democrat spending has produced, and the dawning Grecian future for America that portends. Enough also know that even CBO scoring is a demonstrated day dream, as proven by past experience.
The Obama tax increases would more likely reduce revenue than raise revenue.For almost 50 years now, every time the capital gains tax rate has been raised, revenue has fallen, and every time it has been cut, revenue has increased. The CBO and the Joint Tax Committee have gotten it wrong every single time as well.
The Obama talking point about returning to the Clinton-era tax rates is outdated and erroneous. Counting the Obamacare tax increases that go into effect on January 1, Obama is proposing to raise the capital gains tax rate by 58 percent, perhaps the largest capital gains tax rate increase in American history.
Similarly, after President Bush cut the tax rate on dividends in 2003, the amount of dividends given out soared, and so did the taxes paid on those dividends. If the Bush tax cuts expire for higher income people, who comprise the nation’s investors, we will see the reverse effect. Dividends paid will collapse, and so will the revenues.
The pattern holds true for income taxes, too. Even after Republicans under Bush reduced income tax rates foreveryone, total federal revenues continued to increase, rising 27 percent by 2007, the last budget year for the former GOP Congress, when the federal deficit was $161 billion (so much for the false and dishonest Obama narrative that his own deficits well over $1 trillion every year were due to the Bush tax cuts, two wars, and the Medicare prescription drug program). Letting those tax cuts expire for upper income people earning $500,000 to $1 million or more is also more likely to decrease rather than increase revenue, as these folks are the most economically agile taxpayers and have many options for reducing tax liabilities.
Enough Congressional Democrats, especially in the Senate, fear as well that they will be held democratically accountable for the negative economic consequences—especially on savings and investment — of the Obama tax increases for the nation’s job creators and successful small businesses. If we continue to have a banana republic-style recovery from the recession, enough know and fear that Obama’s second midterms in 2014 will be a bigger blood bath than his first in 2010.
Adopting tax rate increases that cause continued economic carnage will be seen by most voters as a firing offense. And by the 2014 midterm elections:
- Democrats will no longer be able to blame Republicans for the fiscal cliff disaster, as many gleefully believe today that they can.
- The economic crash will show just how wise and beneficial the Bush tax cuts were in the first place, and prove rather than discredit Republican economic policy.
- Blaming Republicans for the expiration of those tax cuts, that Republicans originally passed over uniform Democrat opposition, will lose luster in the glaring sunlight of the next two years.
For all these reasons and more (some Congressional Democrats, especially in the Senate, campaigned on abolishing the death tax), the key is to force the Democrats to vote for an alternative to the Bush tax cuts on the Senate floor, which would give the conference committee a place to start.
Republicans and Conservatives, Speak Up!
Senate Republicans are in the minority, but that doesn’t mean they must be mute on this issue, as they have been. They can gain political leverage by publicly condemning Harry Reid for failing to act on the fiscal cliff when the House has already done so.
Indeed, they can bring much needed attention to this point by calling on Harry Reid to resign for failing to act, and Senate Finance Committee Chairman Max Baucus, too. Yes, that will stir big controversy, because that would involve Republicans fighting back, as Democrats would do if the tables were turned.
That is how the argument gets in the news.
And if the old Republican Senate bulls won’t do that, let the Tea Party senators do it. Newly elected Ted Cruz can make an immediate splash similar to what Newt Gingrich did leading up to 1994 by taking the lead if necessary. Marco Rubio can also raise his profile. Senators Rand Paul, Pat Toomey, Ron Johnson, Mike Lee and others can seize the reins of leadership.
And the same goes for the conservative movement more generally.Good God, speak up, or forever hold your peace! And not just on the fiscal cliff. Jim DeMint can breathe new life into the Heritage Foundation by holding a well-publicized, splashy conference on the real causes of the financial crisis, a debate that conservatives must engage and win, or become Hooverized. Ditto that for AEI, and all the organs of supply-side economics.
Or maybe that will have to be left to Grover, Americans for Tax Reform, and the National Tax Limitation Committee, which may turn out to be the last line of defense for American civilization.
Peter Ferrara is Director of Entitlement and Budget Policy at the Heartland Institute, General Counsel of the American Civil Rights Union, Senior Fellow at the National Center for Policy Analysis, and Senior Policy Advisor on Entitlements and Budget Policy at the National Tax Limitation Foundation. He served in the White House Office of Policy Development under President Reagan, and as Associate Deputy Attorney General of the United States under President George H.W. Bush.