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发帖数: 462 | 1 As they reach the very edge of the cliff and peer down, Washington's policy
makers will buckle down to do what they do best: procrastinate.
Yes, they have to do something, and they will. Look for Congress to
immediately restore some of the George Bush tax cuts, which expire at
midnight on Dec. 31, but to delay the $1.2 trillion in automatic spending
cuts that are to begin taking effect on Jan. 2, even if this legerdemain
causes S&P and Moody's to downgrade the nation's credit rating.
Congress is facing more than the cliff, of course. The semiannual debate on
the national debt ceiling is heating up; the Treasury hits the limit on Dec.
31. Republicans are apt to seize on this as a lever for more spending cuts
from the Democrats, even it causes a temporary shutdown of government. But
that, too, can be addressed by half measures, such as delaying deposits to
federal retirement funds or pocketing some gains from the brief return of
Clinton-era tax rates.
Once a messy, short-term patch job on the leaky fiscal tire is completed,
then Congress and President Obama probably will spend two to six months
contentiously hammering out a more credible deficit reduction, including
entitlement reforms, plus a tax package that will include lower rates for
corporations and tempered increases in capital gains and dividend rates.
Absent a fix, the rates for top-bracket filers will zoom from 15% when the
Bush cuts expire to as high as 25% for capital gains and 43.4% for dividends.
NEXT YEAR'S NEGOTIATIONS will suck all the oxygen out of the room from
January through the spring. This means the president and Congress will
accomplish little else until an agreement is reached. All the while,
President Obama's second-term agenda will have to be placed on the back
burner. This includes the immigration reform he promised the Hispanic voters
who helped him crush Mitt Romney.
Since the new Congress will be nearly as deeply divided as the existing one,
investors and businesses will continue to be plagued with uncertainly
during negotiations. Brace for roiling markets and numerous "down daze." But
if and when a credible fiscal accord is reached later in the year, there
likely will be a real bull run.
Here's one good reason not to panic: The cliff dive creates an environment
for mutually beneficial horse-trading. Both sides will want to move swiftly
to cut the new, higher Clinton-era taxes. Republicans want this as a matter
of pride and principle. Democrats want this for pragmatic reasons: Some 32
million members of the middle class will be hit for the first time by the
alternative minimum tax once the Bush tax cuts expire. That's another key
bloc Obama wooed during the past election, and one that his party needs in
the future.
Both sides also will want to "refine" the automatic, across-the-board cuts
in spending. The GOP believes the cuts to defense are too steep. The
Democrats want to shield social programs like school funding.
THE PRESIDENT, TOO, will have a greater willingness to barter post-cliff.
Political experts say that Obama's best chance to pass any pet legislation
will be in the first 100 days of his second term, while he retains
postelection momentum. A prolonged cliff debate would chew up time, closing
this window.
Republicans likewise could use a deal -- one to burnish the party's
tarnished image. The House GOP appears to be a rudderless mob. Americans
want Republicans to cut a deal, not make a last stand.
And what happens if our politicians disappoint us again and remain at
loggerheads? The automatic spending cuts achieve significant deficit
reduction, amounting to about $133 billion a year. That won't fix the nation
's biggest problem -- the unsustainable Social Security and other
entitlement programs. But forcing the federal government to tighten its belt
is a giant step in the right direction. |
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