Last week we urged congressional Republicans to make a deal with Obama and accept higher tax rates on the wealthy in return for reasonable concessions on entitlement spending. Now House Speaker Boehner is edging in this direction. The FT reports:
People familiar with the negotiations said Mr Boehner was proposing to allow tax rates to rise for the richest Americans, but on the condition that Mr Obama agreed to deep spending cuts on popular pension and healthcare programmes. These include raising the eligibility age for Medicare, the government health scheme for the elderly, and using a less generous measure of inflation to calculate Social Security retirement benefits.
Mr Boehner’s offer falls short of Mr Obama’s goal to see tax rates rise for households earning more than $250,000 per year. But it could set the stage for a compromise to raise the top tax rate starting somewhere in between the Republican and Democratic positions, such as $500,000 or $750,000 of annual earnings.
Negotiations can be expected to drag on until the last possible moment, but Boehner has the merit of at least potentially making sense. And by giving in on taxes while pushing for more on entitlements, he is taking the course that offers the best hope of putting the country on a firm financial footing. Via Meadia would just as soon see everyone’s taxes cut, and especially ours, but we understand that at least for now both death and taxes remain unavoidable.
The negotiations over the fiscal cliff have brought out the worst instincts of the press corps: the entire DC horde is thundering after inconsequential details like a pack of greyhounds chasing a mechanical rabbit. Heated speculation drives substantive news off the front pages and the chattering classes obsess over details that nobody on the planet will remember two weeks from now.
There will be a deal or there won’t. It will help the economy or it won’t. We will all know in two weeks what nobody knows or can know today, and spending frenetic hours tracking rumors on Twitter isn’t going to get anybody anywhere. Financial speculators who make heavy gifts to politicians are probably getting better inside information than the new media, and about this there is nothing much to be done.
At Via Meadia we are no longer as horrified by the fiscal cliff as we are bored by the chatter around it. We are almost as impatient for this to end as we were for the presidential election to be over.