John BoehnerJohn BoehnerNunes rebuffs calls for recusal Wounded Ryan faces new battle Bottom Line MORE is a pretty savvy legislative operator. He knows how to use his political leverage. He knows how to cut deals. He knows how to get stuff done.
But John BoehnerJohn BoehnerNunes rebuffs calls for recusal Wounded Ryan faces new battle Bottom Line MORE is not a miracle worker. So we should start diminishing expectations about what he is going to be able to accomplish with tax rates, the debt limit, entitlement reform or any of the other fiscal matters coming up in the next couple of months.
Thomas was fabulously successful in getting the biggest bang for the buck, but everybody knew that those tax cuts couldn’t last forever. In fact, they were designed to phase out in 2010 and only have stuck around for two more years because the president was so desperate to get himself reelected that he folded when Republicans pushed him to the brink.
The impact of these rates expiring is a matter of theology. If you are a Democrat, you believe that we can only make economic progress if the tax rates hitting the rich are discontinued. If you are a Republican, if those rates expire, small businesses will collapse and the economy will suffer.
I don’t know which side is right, but I do know that America has had far higher rates in the past, but those rates were accompanied by so many loopholes that the effective rate tended to be much lower. Of course, many of those loopholes are still around these days, and many wealthy people pay relatively little in taxes (Mitt Romney’s 14 percent is a perfect example).
Republicans have traditionally had a huge distaste for higher taxes, especially if those higher taxes go to pay for bigger government. They have such an aversion to higher taxes that they will go to almost any length to make certain that rates won’t go up.
The problem for the GOP is that all tax rates are going to expire automatically unless the president and the Congress reach an agreement to keep some of them around. The other problem is that the president doesn’t have to worry about his reelection, because that reelection is over, and he won it. Republicans, on the other hand, have two short years to protect themselves against a tough midterm election.
House Republicans can play chicken all they want, but at the end of the day, they have to fight to preserve as much tax relief as possible. And if they aren’t successful in preserving tax cuts for the wealthiest Americans, there isn’t much they can do about it. Republicans ought to be delighted that the president is pushing to preserve any tax cuts at all. If he cared a lick about the deficit, he wouldn’t bother.
Republicans should also dispense with the notion that the debt ceiling is some great piece of leverage for them. It isn’t. It is a necessary and unpleasant part of being in the majority. Neither the GOP nor the president can afford to have the Treasury default on our debts. The hit to our economy would be too devastating.
On the debt ceiling, the Speaker should insist that Democrats provide half the votes. This is a necessity of governing, and whoever the Democratic leader is at the time must be made to understand that unless there is some shared sacrifice, there won’t be any debt-limit increase.
House Republicans have to be realistic about what they can accomplish with the so-called fiscal cliff. They should keep their expectations low.
Feehery is president of Quinn Gillespie Communications and spent 15 years working in the House Republican leadership. He is a contributor to The Hill’s Pundits Blog and blogs at thefeeherytheory.com.