It’s never a good idea to display weakness during negotiations. Your opponent will sense your fear and up his demands.
That’s certainly what we’re seeing in Washington. The cartoon at this link captures the GOP’s wobbly attitude on taxes, and this interview is about the ever-increasing demands of the Obama Administration.
It’s rather galling, by the way, to be lectured on taxes by a tax cheat like Tim Geithner.
But my key point is that the GOP’s preemptive surrender emboldened the White House, and helped move the debate even further to the left.
Let me elaborate on two points from the interview.
- We don’t need a tax increase. We can balance the budget simply by limiting spending so that it grows by “only” 2.5 percent annually. As I say to Cavuto, the White House is pushing higher taxes in order to enable a bigger burden of government spending.
- It’s important to define austerity correctly. To provide an analogy, we have to drink liquid to survive, but that doesn’t mean it would be a good idea to guzzle paint thinner. Likewise, we need austerity, but that shouldn’t mean higher taxes. We need to be like Estonia and tighten the belts of the public sector, not the private sector.
It’s not my job to give Republicans political advice, but I also want to expand upon the arguments I made a couple of days ago, when I wrote a post giving five policy reasons and five political reasons why the GOP shouldn’t surrender on tax increases.
A couple of readers correctly pointed out that I forgot to mention that tax increases are political poison because middle-class voters turn against the GOP once “revenue” is on the table. They are completely right, and my oversight is inexplicable since I’ve actually made that point in the past. Here’s some of what I wrote last year.
If Republicans put tax increases on the table, however, the politics get turned upside down. Instead of being united against all tax increases, voters realize somebody is going to get mugged and they have an incentive to make sure they’re not the ones who get victimized. That’s when soak-the-rich taxes become very appealing. Democrats, for all intents and purposes, can appeal to average voters by targeting the so-called rich. And even though voters will be skeptical about what Democrats really want, they don’t want to be the primary target of the political predators in Washington. Think of it this way. You’re a wildebeest running away from a pack of hyenas, but you know one member of your herd will get caught and killed. You despise hyenas, but at that critical moment, you’re main goal is wanting another member of the herd to bite the dust. This is why surrendering to tax increases put Republicans in a no-win situation. They oppose class-warfare taxes because they understand the disproportionately damaging impact of higher top income tax rates and increased double taxation of dividends and capital gains. So when GOPers get bullied into agreeing to raise taxes, they want to target less destructive sources of revenue. But that usually means…taxes that are more likely to hit the middle class. Needless to say, Democrats almost always win if there is a fight on whether to tax the middle class or to tax the rich.
I have to pat myself on the back for that passage, particularly the analogy that equates politicians with hyenas (though in the past I’ve apologized to hyenas for that unfair comparison).
Let’s close with a very good cartoon, which points out the foolishness of the media for wanting to send more money to Washington when even they understand that the town is filled with clowns and buffoons. That’s actually a very serious point, as I note about halfway through the interview included in my five-political-reasons-five-policy-reasons post.
But it’s hard to laugh when you contemplate what’s happening. Obama is bullying the GOP, and the Republicans are in the process of surrendering to his class-warfare demands.
That will lead to bad policy, but it will also result in an emasculated, compliant, and house-broken GOP for at least the next two years, and perhaps even Obama’s entire second term. So even though the fiscal cliff tax hike is bigger than what Obama’s currently demanding, the long-run policy damage of surrender almost surely will be far greater.
Republicans don’t have many options in this fight. But they can show some cojones and tell Obama that the only way he’ll get a tax hike is if he wants to take the nation over the cliff.
P.S. If you like the Henry Payne cartoon in this post, you can enjoy some of his other work here, here, here, here, here, here, here, and here.
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[…] can enjoy some of Payne’s best cartoons here, here, here, here, here, here, here, here, here, and here. My favorite is the one with Robin […]
[…] can enjoy some of Payne’s best cartoons here, here, here, here, here, here, here, here, here, and here. My favorite is the one with Robin […]
[…] the interview, I don’t say what should happen, though I’ve previously argued that it’s better to go over the cliff rather than give Obama a victory that will set the stage for further defeats over the next two […]
[…] the interview, I don’t say what should happen, though I’ve previously argued that it’s better to go over the cliff rather than give Obama a victory that will set the stage for further defeats over the next two […]
[…] just something that happens among Washington insiders. I’ve previously explained that ordinary Americans get very tempted to support class-warfare tax hikes once they realize someone is going to be raped and pillaged by […]
[…] Realizing I left out a powerful argument, I then added another political argument in this post. […]
Republicans seem to give in most of the time. I wish for the good of the country someone would step up and try to reverse the trend towards more spending and start cutting the budget for a change. We only had a budget deficit of about 161 billion in 2007 with income about where it is now. Then why do we have a budget deficit over one trillion today? It is because our problem is spending and not revenue!!!
When Republicans publicly break their pledges not to increase taxes, that’s good. It undermines their credibility among the naive and reinforces faith among those who already know better.
Now, who is Sheriff Tommy Gage, and why does Randy McDaniel, his Chief Deputy, think that Tommy needs a “$300,000 Shadowhawk copter”? In fact, why do the salespeople of the Shadowhawk’s manufacturer think that Tommy and Randy need their bird?
See the Friday Factoid for Friday, Jan. 4, 2013 in “The Pessimist – A 2013 Daily Calendar” at http://despair.com/calendars.html.
You can meet Tommy and Randy at http://www.mocosheriff.com/.
Very well said…I just wish the Washington powers that be would listen!
Mr. Mitchell, you have apparently been at this job (advocating for sound tax policy) for a long time. How have you done? You have “convinced” people like me, who already agree with you, but how well have you done convincing others, particularly the others who write tax policy? Clearly, not so well. Einstein’s definition of insanity comes to mind.
At some point, one has to look at his teaching method and realize that if the point isn’t getting across to the student, a change in method is worth considering. The best teaching method is to let people see things, to experience things, for themselves, and now is the time.
I do not mean the Republicans should surrender. There is a huge difference between surrender and a principled withdrawal. They should take a magnanimous step aside and allow Obama and the Democrats to implement their policies – lose this battle because otherwise they will get the blame and lose the battle anyway. And when the economy sputters, the only fingerprints on it will be the big spenders. Then, MAYBE, the lessons you have been trying to teach will finally register with your students. It will be a painful lesson – for all of us – but the lesson cannot be learned any other way.
Dan another great article – always appreciated. Do you ever feel lonely? Anyway, haven’t seen you write about FATCA lately. There is an Fact Finding Forum on FATCA in Toronto next weekend. Drop by.