GOP loses way on fiscal cliff

In the war over the “fiscal cliff” of looming automatic spending cuts and increased tax rates, the GOP is reeling. Republicans are playing right into the Democrats’ hands, time and time again.

Speaker John Boehner (R-Ohio) made the generous but misguided gesture last week of offering tax increases via eliminating or capping deductions, without demanding any sort of tax reform in return. Sen. Bob Corker (R-Tenn.) then exceeded the Speaker’s generosity on Sunday by acquiescing to higher tax rates, in the abstract hope that the White House would return the favor when it comes to entitlement reform.

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Any tax increase will damage our already fragile economy — so why continue appeasing the White House and Senate Majority Leader Harry Reid (D-Nev.), especially when Democrats have shown so little goodwill?

Republicans cannot win this debate until they realize what the White House already knows: that this war cannot be fought in closed-door negotiations, but must be carried out on the battlefield of public opinion.

With five, concrete steps, House Republicans can take the momentum in this fight and convince Americans that fiscal responsibility, not carte blanche taxation, is the key to our prosperity.

First, the House should pass a bill extending for six months to a year all the cliff items. This means all existing tax rates, the Alternative Minimum Tax patch and even the Social Security payroll tax cuts. The sequestration deadline must also be extended.

Our tax code and entitlements are in serious need of reform, and it’s absurd to think Congress and the White House can achieve anything meaningful between now and Christmas. We need more time to hammer out real reforms and, despite what the Democrats say, we can buy this time without the wholesale abandonment of fiscal restraint.

Any tax increases will only hurt our economy. With business investment faltering, the GOP needs to stress the urgency of growth while our country is on the brink of recession. We should do a better job relating to the misadventures of Western Europe and Japan, where governments are consistently raising taxes and their economies are consistently in decline.

Second, we should pass another bill mandating that Social Security trust fund assets be converted to marketable Treasury bonds. This will turn the tables on President Obama, who is imprudently demanding Congress raise the debt ceiling yet again, and without precondition.

If those trust funds had marketable Treasury bonds instead of today’s illiquid IOUs, the president couldn’t threaten that Social Security and Medicare payments will stop unless the ceiling is raised. The GOP could use such a bill to reassure seniors that their benefits would not be jeopardized, even if the debt ceiling is not raised. The GOP could proclaim, “We Republicans don’t want your benefits to be hostage to Washington’s fiscal irresponsibility.”

Third, lawmakers should pass a bill mandating that no money can be diverted from Medicare to pay for ObamaCare. Reid will inevitably block a vote in the Senate, and Republicans can use this opportunity to showcase how the Democrats are jeopardizing Medicare benefits for millions of Americans.

Fourth, exposing the Democrats’ hypocrisy is only part of the equation. To show they can do better and protect America’s elderly, the House should also pass a resolution that they will not accept any entitlement reform that reduces benefits for those who are on Medicare and Social Security, or who are about to go into those programs.

Fifth, the House should pass a bill suspending all of those ObamaCare levies that hit next year. If the president and the Democrats were serious about repairing our economy, they wouldn’t be aggressively pushing ahead with the damaging healthcare law and its one trillion dollars in new taxes. Again, call attention to the hypocrisy.

House Republicans can take charge of the terms of the debate by drawing a hard line on tax increases. By passing these bills, the GOP can steal the initiative, put forward a positive plan for the country and help to start swinging public opinion.

More importantly, by standing strong now, the GOP can implement real and much-needed overhauls to entitlements and the tax code over the next year. This war is about much more than the next two weeks. It’s time to bring Corker and his colleagues back to GOP ranks and show the public that the Republicans have a more responsible plan for our country.


Forbes is chairman and editor in chief of Forbes Media and co-author of Freedom Manifesto: Why Free Markets are Moral and Big Government Isn’t.