FISCAL Cliff Notes

A few short cliffs note summaries on how I see the Fiscal Cliff negotiations at this time.

Credit: InfoWars.com

• Congress undoubtedly will recess no later than December 21.  Any bill to be voted needs to be ready by at least three days before that (December 18).  That is exactly two weeks away.  There is very little time to get something done. 

• The Obama White House is not conducting a negotiation.  They appear to only be interested in playing a blame game.  The Republicans should have understood this from beginning and a big priority should have been in taking positions that would shift responsibility (and blame) to Obama.  Conceding the tax rates is the best way to put the onus on Obama.

• I agree wholeheartedly with the substance of attempting to reduce rates and broaden the tax base.  However, this is too complicated for the average person to understand.  The Republicans should concede the tax rates in return for substantial spending reductions or they will continue to get beat up.  Raising rates on the rich are the only thing that they have to use to get the spending cuts that are necessary.  That is the reality whether they like it or not.  It is a valuable bargaining chip and they should get something very big for it.

• I wrote previously that I thought they should have conceded the tax rates right after the election and asked for the repeal of Obamacare and spending cuts equal to at least $3 for every $1. There would probably be little chance that Obama would take this deal but what would Obama be talking about right now?  It would have changed the conversation dramatically as well as the blame.

• The Republicans have an inherent difficulty in these "negotiations" as there is no one person that can really speak for them.  The President has a lot of authority to take positions and lead.  John Boehner and Mitch McConnell cannot do that.  They have to make sure they have almost 300 other members of Congress with them to do anything.  That is an almost impossible task.  It also puts them at an enormous disadvantage in the fiscal cliff talks.

• The most outrageous demand that Obama has made in the negotiations is that he wants to have the  unilateral power to raise the debt ceiling.  This is not only audacious (The Audacity of Hope?) but also would completely usurp the Constitutional responsibility of Congress.  It is almost akin to Franklin Roosevelt's attempt to stack the Supreme Court in the 1930's.  For those who might have forgotten, the U.S. Constitution, Article 1, Section 8 says in part.

The Congress shall have the Power to lay and collect Taxes...to pay the Debts of the United States...To borrow Money on the credit of the United States.

           It does not mention the President at all.

           The Constitution in Article 1, Section 7 also states

All Bills for raising Revenue shall originate in the House of Representatives

• Due to this Constitutional power and the inherent difficulty the Republicans have in "negotiating", I believe that the only way forward for the House is to write legislation, pass it and send it to the Senate.  I would have 3 or 4 bills ready to go.  Pass the first and send it on.  If the Senate does not act, pass another option and send it on.  Do this between now and December 18.  If nothing is done by December 18 go home and the Democrats can decide which of the options (if any) they want to use to avoid the fiscal cliff (if they really want to avoid it).  
• I still believe the best alternative is to pair the tax rate increase on the rich with a repeal of Obamacare.  
• A back-up plan is to take a one-year increase in the rates on the rich for a one -year deferral of Obamacare.  This provides time for tax and entitlement reform.  Set goals on each and if they are not met the tax increase expires and Obamacare is repealed at the end of 2013.
• There are probably other good ideas.  The idea in each is to give Obama and the Democrats what they profess they want (tax rate increases on the rich) but extract a very, very large concession for it.  

• Many ask me what I think will happen.  I have no idea.  I know John Boehner to be an extremely responsible person.  He will do everything he can to produce a deal.  However, I am not sure that Obama wants a deal.  If I had to bet, I think we will go over the cliff because I think Obama does not really want a deal.  He wants more revenue, he wants big defense cuts and he wants to blame it on Republicans.  He gets all of this by going over the cliff the way things stand now. That is why I think the Republicans are making a mistake by not agreeing to the tax rate increase on the rich in some form or manner as I suggest above.  Forget the negotiations.  Win the blame game and let Obama live with whatever comes.