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article imageGOP and Democrats continue playing chicken in fiscal cliff battle

By Can Tran     Dec 6, 2012 in Politics
As the Democrats and Republicans continue their "chicken" match on the fiscal cliff, more people are coming out and giving their two cents on it. One analyst says that Congress should go off the fiscal cliff.
The Democrats led by US President Barack Obama and the Republicans led by House Speaker John Boehner of Ohio continue their fiscal cliff battle. For the most part, neither side has budged as of yet. The biggest thing that is keeping both sides from coming to a compromise is whether or not to tax the upper 2% of wealthy Americans. Obama and the Democrats are insisting it is necessary at the same time Boehner and the Republicans don't want the upper 2% to get taxed.
On Wednesday, December 5, Obama met with members of the Business Roundtable. According to Fred Smith who is the founder of FedEx Corp., also the president and CEO, he dismissed the notion that raising taxes on the top 2% would kill jobs. He shrugged it off as being a myth.
However, a December 3 op-ed on the Wall Street Journal said that raising taxes on the upper 2% would end up hurting the other 98% more. In the op-ed, Charles Kadlec writes that the truly rich have ways to evade the tax hites. Furthermore, marginal tax rates would reduce economic activity. Kadlec said that the high income people will inevitably shaft the lower income people with the bill.
In this respect, what Smith is saying and what Kadlec is saying conflict with each other to an extent.
Back to the Republicans and Democrats, neither side are willing to lower their guns. However, things look shaky on the Republican side as it looks to be a no-win situation. Obama decided to get more personal on the fiscal cliff as reported by various outlets. He recently visited a family in Northern Virginia to talk about why it's necessary to raise the tax rates on the top 2%.
In the case of the Republicans, there are two factors they have to deal with. The first factor is Grover Norquist, who is the president for the group Americans for Tax Reform. The second factor is the Tea Party Movement. Norquist is known for his anti-tax pledge which many Republicans have signed vowing to oppose tax increases.
While Norquist is taking a lot of political fire for making sure no Republican violates the pledge, he is still standing firm. He strongly believes the GOP will not abandon the pledge. Not long ago, Norquist threatened to make sure pledge breakers lose their seats in future elections. Also, Norquist warned if the country goes off the fiscal cliff, the Tea Party Movement will come back bigger and stronger by the 2014 elections. However, the notion of the Tea Party Movement come back let alone bigger and stronger is up for debate.
Leslie Marshall, in a US News op-ed, says differently. In the op-ed, the mainstream GOP “schooled” the Tea Party Republicans on how to vote. Furthermore, the op-ed explained that the Tea Party Movement were the following: very partisan, very conservative, and angry at the president. It also talks about decline in support for the Tea Party.
At the same time, in an December 6 article on The Atlantic, it says that the GOP has done more damage than the Tea Party Movement. Even before the Tea Party, the article points out how the mainstream GOP has pushed for the Iraq War and had the K Street Project. In another article on The Atlantic, also dated December 6, there is the notion that the Democrats need their own version of the Tea Party.
Back to the Tea Party, FreedomWorks, which is a Tea Party organization, expressed opposition to Boehner's proposal. Originally, Boehner and other House Republicans rejected Obama's initial proposal. In return, Boehner and several other high-profile members of the House sent their own fiscal cliff proposal. Obama and the White House rejected it. Also, other Republicans criticized it as well.
Matt Kibbe, the president of FreedomWorks, said that Boehner's plan didn't have much of a “substantial vision.”
So far, it's shaky ground for Boehner and other House Republicans. A Washington Post blog, dated December 6, gives reasons that the Republicans have very little leverage to use against the Democrats. The first reason is that Democrats have the “high ground” on the main issue. In this respect, more Americans support the idea of taxing the upper 2% of wealthy Americans. Democratic Senate Majority Leader Harry Reid of Nevada and Democratic House Minority Leader Nancy Pelosi of California are capitalizing and standing by President Obama.
Reid said that that he wouldn't think about other proposals unless the GOP agrees to raise taxes on the wealthiest Americans. Recently, Reid compared the GOP leadership to the New York Jets.
Pelosi said that they will go over the cliff if an agreement isn't reached. This somewhat echoes the words of US Treasury Secretary Timothy Geithner. Geithner said that the White House is preparing to go over is the negotiations do not produce a deal. Back to Boehner's proposal, Pelosi slammed it as being an “attack on the middle class and on the nation's seniors.
GOP Senator Tom Coburn of Oklahoma had said that the country's gone over the fiscal cliff already.
Mark Zandi, the chief economist for Moody's Analytics, said that Congress should go over the fiscal cliff. That was provided if a better deal is reached next year. Zandi made his case today at a hearing in front of the Joint Economic Committee. He believes that the talks can extend into February of 2013.
In this respect, you have three perspectives on the fiscal cliff. In another Washington Post blog, it asks what the GOP would want the Democrats to give in return if they are willing to submit on the taxes. That brings up what the Democrats would give in return for Republicans to violate the Norquist pledge. It is unknown as the reports show Obama and the Democrats having the upper hand.
There are some recent articles in which the authors are giving suggestions on how to solve the fiscal cliff issue. Derek Thompson, a senior editor for The Atlantic, talks about three ways that Democratic and Republican interests align: keeping the Bush tax cuts where they are for incomes up to $250K, avoid deep cuts to the defense budget/Medicare/non-defense spending, and the grand bargain. In that article, Thompson calls for the “Obvious Bill.” Under this bill, the fiscal cliff is solved without creating another cliff.
In an article on America Blog, one is suggesting to tax all Wall Street transactions. The piece blames Wall Street for putting the country in this predicament. It said that by taxing Wall Street transactions, it would generate a lot of funds.
An op-ed article on Press Citizen gives the suggestion of closing off offshore tax loopholes. By doing so, it could generate $150 billion in tax revenue each year.
These are some suggestions given in regards to dealing with the fiscal cliff issue. Recent poll results on the issue look more favorable to the Democrats than the Republicans. Also, another poll taken seems to be unfavorable to Norquist.
The latest results of the Qunnipiac University poll, as reported by CNN, shows that sixty-five percent of registered voters favor increased taxes on those that make more than $250K per year. That consisted of almost eight-five percent and two-thirds of Democrats and independents respectively. At the same time, a sizable percentage of Republicans oppose it.
Results from an Associated Press/GfK poll shows that more people want the tax cuts to expire for the top wealthy people. The results are similar from a poll conducted by ABC News and the Washington Post.
Quinnipiac University also had another poll. In this poll, fifty-three percent feel that the Democrats are more likely to resolve the situation. However, that's not the only other poll launched by Quinnipiac University. In another poll, a little over three-fourths of Republicans thought an anti-tax pledge was a terrible idea. A little over eight percent, altogether, thought the notion of an anti-tax pledge is a bad idea.
In a recent fact check article on USA Today, Boehner and Geithner are accused of giving conflicting and misleading statements on Obama's fiscal plan.
With everything that's being reported, it seems that the ball is in the Democrats' court. Whatever happens will spill into the 2014 and 2016 elections. Right now, neither side is budging from their positions.
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