Obama, Give In to the Irrational GOP

Obama should cave on tax hikes to achieve his other goals.

  • Share
  • Read Later
Jason Reed / Reuters

President Barack Obama walks in the Rose Garden of the White House in Washington, March 13, 2013, upon his return from a meeting at the U.S. Capitol Building with House Republicans on a budget deal.

In a rational world, Republicans would get the blame for the budget mess in Washington. In the George W. Bush era, they frittered impressive surpluses into unprecedented deficits. In 2011 they threatened to force the U.S. government into default if President Obama didn’t accept massive spending cuts, essentially taking the global economy hostage; the current sequester was part of their ransom. And now, even though the deficit is shrinking, even though just about everyone agrees that the sequester’s haphazard cuts will damage a fragile economy, GOP leaders won’t even discuss an alternative that includes new tax revenue.

Unfortunately, we don’t live in a rational world. The Beltway establishment recognizes the intransigence of the GOP, but the capital’s scorekeepers are incapable of blaming just one side. Their solution to the stalemate is just like Obama’s: a mix of spending cuts and tax hikes. But they still can’t resist pox-on-both-houses narratives. Why won’t Obama lead?

The answer is that the president isn’t omnipotent; he can’t bend the opposition to his will through schmoozing or fortitude. And Obama has already compromised, agreeing to $1.5 trillion in spending cuts and even proposing modest entitlement reforms. The only way Obama could fulfill the punditocracy’s dreams of bipartisan agreement would be to drop his demand for new revenues and cave to the tax-phobic Republicans he thumped in November.

So he should cave — not to appease the chattering classes, unify Washington or show the country he’s open to compromise. He should cave to ease pain, advance his agenda and improve the country in tangible ways.

Grunwald sequester breakdown

Forget the dopey spats over White House tours and Easter-egg rolls. The sequester will cause real harm, so the President ought to at least try to replace it. And the pursuit of new revenue, while a reasonable goal, is not as important as his other goals — like avoiding short-term austerity that could derail the recovery, promoting long-term prosperity through targeted investments and tax reform, moving the budget in a fairer direction and preventing the GOP from taking more hostages in the future. He can’t possibly get a deal with everything he wants. But Republicans are so eager to avoid new taxes — and to make Obama look weak — that he might get a lot of what he wants if he gives them their top priority.

For example, everyone knows that the tax code is riddled with inefficient and indefensible loopholes and giveaways, from small perks for corporate-jet owners to the carried-interest outrage that helps Mitt Romney pay a lower rate than you do. Republicans say they’re willing to ditch some of those goodies but only if the proceeds are used to lower rates. Fine! Obama can insist on lowering middle-class rates, which would boost the economy and enable him to keep his long-standing promises to give ordinary Americans a permanent tax break. He provided temporary relief to the nonrich throughout his first term, but it expired with the fiscal cliff in January. This might be his best, last chance to make the tax code more rational and more progressive.

On spending, Republicans have already signaled that they want more cuts but that they don’t care too much about what gets cut. They’ve even offered Obama some flexibility to make the cuts, hoping he’ll be blamed for unpopular ones. Fine! Obama can whack programs that don’t promote his priorities, like fossil-fuel subsidies and sprawl roads; he can also demand back-loaded cuts that won’t kill jobs now. And he can protect the “win the future” stuff he cares about, like research and clean energy, as well as the safety net that Paul Ryan’s budget aims to shred.

Ultimately, Republicans might say no. They seem O.K. with the sequester, their base hates deals with Obama, and a stagnant economy could help them in 2014. So maybe there’s no deal. But Obama has spent the past four years pursuing change that’s possible, not change that’s perfect. He’s usually tried to do what he’s said he would — on energy, health care, education, taxation — but he’s also emphasized deeds over words. If he’s willing to surrender his demand for new taxes, he might be able to improve the status quo.

Perhaps it seems unfair that a newly re-elected President should have to settle for half a loaf, especially when he has to accommodate such unreasonable opponents. But they were re-elected too. So if Obama wants to keep making change, he’ll need to keep working in their crazy world.

This article is featured in the Commentary section in the April 1 issue of TIME Magazine

187 comments
moddem38
moddem38

Mr. Grunwald should explain  why raising taxes during  a fragile recovery is "reasonable", but cutting spending is a terrible idea. Both actions depress economies, as that Keynes guy explained some years ago. And if the budget deficit is going down anyway, what is the need for new taxes?

sinophil49
sinophil49

The Tea Party-dominated GOP has never shown the willingness to compromise. After giving up any demand on the Democratic side of an issue, the GOP has yet to give up on a demand on their side. They see the giving up of a Democratic demand as merely a sign of weakness. 

We have seen this GOP maneuver time and time again. Obama laced the 2009 stimulus bill with tax cuts as a GOP enticement. The GOP voted against it en masse. Obama adopted in toto the Republican ideas for health care insurance reform and even tweaked it further to satisfy GOP demands. The GOP cemented their opposition to Obamacare. The bill passed both houses of Congress without a single GOP vote. In the battle over the debt ceiling in the summer of 2011, Obama and Boehner hammered out an initial agreement, but Boehner then caved in to the demands of the extreme right of his own party. The resulting final agreement ended up with a raise in the debt ceiling, but this was linked to a $917 billion spending cut, without a single penny of revenue increase.

If Obama were to give up his demand for revenue increase now, the GOP would NOT give in one iota on program cuts. On the contrary, without the increased income, the GOP will loudly proclaim that Obama's proposal would worsen the deficit and use THAT as a demand for yet more program cuts. 

Libtards-UNITE
Libtards-UNITE

Taking in 10 dollars and spending 20 is never a good idea, anywhere, ever. 

carolerae
carolerae

Mike, this is a Naive proposal.  Gird your Loins.  The Gop won't settle for anything less than the Ryan Budget.  They plan to Default if the Dems won't sign on to it.  It has to Balance in 10 years!  They plan to use the Debt Limit to obtain everything.  Looks like we're going to Default!  Obama & the Dems will not Repeal Healthcare & Kill Medicare.  

Sol_
Sol_

So if I stand up and say " Government is the problem!" or "Taxes are Evil!" I could be a millionaire talk radio personality or even be considered to be the Next President of the United States. Seems like the qualifications to be a Republican Leader are quite low. To them, the solution to all of the Country's societal issues are to to let the free market work it it out, easy peasy. That seemed to work out really well after the fall of the Roman Empire, as that would have been a Conservative Utopia, no Taxes, No Government and complete freedom to do whatever you want, Society certainly Blossomed during that period.

starman
starman

The article's suggestion is almost as crazy as Ryan's budget.  IMHO, the Repubs in the House, elected through gerrymandered districts, which itself is a blatant abuse of power by state legislatures, stick to the same rationale as their Repub forebears did in the 1920s.  To what can we attribute this?  Gross stupidity, gross ignorance, or perhaps insanity (a sign of which is to repeat the same actions over and over, and expect different outcomes)?  Let us be generous and say it is merely an incredible degree of ignorance; then in nearly a century they collectively have learned absolutely nothing, except maybe how to distort democracy through local control of state legislatures by election machinations to deprive citizens who oppose them of equal voting power and even voting opportunity.  But ignorance is no excuse under the law, and a repeated pattern of violations of voting rights smack of sedition. What is the appropriate remedy to deal with sedition?

grape_crush
grape_crush

> Obama, Give In to the Irrational GOP

And here I thought we weren't supposed to negotiate with terrorists.

> Republicans say they’re willing to ditch some of those goodies but only if the proceeds are used to lower rates. Fine! Obama can insist on lowering middle-class rates, which would boost the economy and enable him to keep his long-standing promises to give ordinary Americans a permanent tax break. 

Smells too much like a victory for Obama for GOPers to follow through on. Especially if it's not paired with massive changes to Medicare and Social Security.

> If he’s willing to surrender his demand for new taxes...

If a person isn't willing to enact new taxes, they are not serious when they complain about the size of the debt and deficit. Period.

mantisdragon91
mantisdragon91

So we give in to children when they throw tantrums? Sound like the gist of the article.

SixSixSix
SixSixSix

Don't be so naive. The very last thing that the Repubs want is to lower taxes on those would work for a living. They raised the employment tax on everybody while moaning about the poor profiteers paying even a little more. By the way, those profiteers are literally, not metaphorically, the 1%. Repubs hated reducing the payroll tax because it finances more of the government than the total out of kilter "income tax" as if the payroll tax were not a tax on income. And better yet for all intents and purposes the 1% don't pay the payroll tax (effectively at a rate of 0% on total income). And even better, if you means test SS and Medicare, the savings are negligible because the 1% don't represent much of the SS burden, 1% at most to be precise. And even better still, the 1`% never use Medicare or any from of health insurance: they self insure so none of their personal medical information gets out of their controlled privacy. No wonder they would be happy to see Medicare die and if need be all of those on it too.

drudown
drudown

President Obama should absolutely not acquiesce to the GOP on budgetary matters. Aside from the fact it is fiscally imprudent to advance a "no new taxes" agenda in a time of fiscal shortfall, one need look no further than Europe to see the fallacy of "austere spending cuts = balanced budget"....much less social cohesiveness. The GOP's special interests puppeteer just wants to condition the People that, in the end, the People "really don't want" better education, better Heath Care and less protracted military conflict. They want us to live in fear and acquiesce to a weakened government that is, in the end, the only thing that can protect our collective pecuniary, strategic and diplomatic interests.

erniet43
erniet43

Just wondering, you point out that "they were elected,too" but if you examine just the obstrucionists in the House and look at just how many citizens they actually represent, would that total approximate the total public vote that Obama received?  I don't think so.  So, who should Obama "cave" into?

shepherdwong
shepherdwong

"Republicans say they’re willing to ditch some of those goodies but only if the proceeds are used to lower rates."

Other than "closing loopholes" what other new revenue has the President insisted upon? And I haven't heard of any major disagreement over lower rates for the working classes - actually, I haven't heard of any debate about that at all. It seems to me that the major disagreement is about major cuts in Medicare, Medicaid and Social Security, i.e., "entitlements," that the GOP insists that Obama propose as part of a budget deal. What am I (or you) missing here?

mantisdragon91
mantisdragon91

@Libtards-UNITE Was it  a good idea when the current leadership of the Republican party put two wars on the nation's credit card and wasted the surplus left to them by Bill Clinton?

WilfTarquin
WilfTarquin

@Sol_ You don't have to reach back to the dark ages, the present GOP  are swooning over China. China, after all, has no environmental protection, no worker protection, no social security, no medicare, hardly any pensions, and companies and rich and connected people are above the law and can do whatever they want. They wont put it quite in those terms, they'll talk about growth and competitiveness, but those are the reasons they consider China a role model for the US.

rohit57
rohit57

@starman"the Repubs in the House, elected through gerrymandered districts,"

This argument sounds good until you look at some facts in the other direction.  There are 30 Republican governors versus 19 Democratic governors.  And gerrymandering does not work for electing governors so that is something REAL on the Republican side.  Moreover, in 2008 McCain received 5 million individual votes from California and zero electoral votes from California.  So the strange system we have can work against Republicans as well.

Think of the nearly 61 million people who voted for Romney.  That is a lot more than the 1%.  So why not treat the "other party" or at least their voters with a modicum of respect?

I don't think that the Republican party as at present is a particularly admirable party.  At the same time, the Democrats have their problems too.  They do not want to touch entitlements, and without entitlement reform we will go the way of Greece (or is it Cyprus?)

rohit57
rohit57

@grape_crush "And here I thought we weren't supposed to negotiate with terrorists".

If Democrats think and talk like that, why should the Republicans bother to think about compromise?  You are a fanatic Republican hater, the mirror image of the Obama haters on the other side.

If people like you, the haters of both sides, would go away for five years, the rest of us could try to actually address the problems of this nation. 

reallife
reallife

@mantisdragon91   wow! what an insight! you must be a product of our liberal public schools! amazing! 

TyPollard
TyPollard

@erniet43 

Progressives were also elected. Do they get their way as well?

SixSixSix
SixSixSix

@shepherdwong What you are missing is the greatest con job in American history. FICA raises more money than the supposedly general "income tax". Much of that is diverted to running the government to make up at least some of the short fall. FICA is a totally regressive tax that most working people pay in the full amount of 15%. Remember you have to include the hidden mandatory half of the tax "paid" by the employers to the government by not passing that money on to the workers. Note the intentional slight of hand. The self employed and foreign residents already know the full pain.

But because it is capped, the wealthy effectively pay 0% on total income, chump change. But if you earn your income, chances are overwhelming you paid a full 15% before you paid the additional income tax on nearly everything that you earned, certainly at the Federal level, likely at the State level, and possibly at the municipal level. But if you live off of equity and profiteering you may have paid nothing, and if like Mitt you had annoying speaking fees you still paid 0% effectively on your total income even after you managed to make this year's income look like nowhere near your true cash flow and then exempted away most of that. 

FICA is the most regressive, socially bad tax imaginable. It does not merely fail to be progressive, it is not even flat, it is extremely regressive. And now the Repubs want to punish the people who paid it. If the Democrats had any stones they would demand that FICA be uncapped. The deficit would disappear instantly. Can't have that. Little people must suffer in distraction first.

drudown
drudown

@shepherdwong 

You are "missing" the fact that half the TIME "journalists" are partisan hacks feigning objectivity. 

Libtards-UNITE
Libtards-UNITE

@timeless @Libtards-UNITE Yes timeless, exactly like that.  See the difference between my budget and the government budget is that the balance on my debt is REDUCING.  I am paying it off and can tell you the month and year that I will have it paid off.  Can you tell me that about our national debt load?

WilfTarquin
WilfTarquin

@rohit57 @starman Gerrymandering is the reason the GOP has majority in the House. Without it Obama would have control of both the Senate and the House.

grape_crush
grape_crush

@rohit57@grape_crush > If Democrats think and talk like that, why should the Republicans bother to think about compromise? 

You're funny.

Uncompromising Republicans threaten to crash the world economy if they don't get their way, and it's my fault - after the fact - that GOPers are too sensitive to criticism to compromise.

Clutch those pearls harder. There's a fainting couch over thataway.

If GOPers don't want to be compared to terrorists, then maybe they can stop taking us as hostages? Work that out first, and then let's talk about comity, okay?

> You are a fanatic Republican hater

You don't know me, you know nothing about me. I hate stupidity and lack of compassion and irrationality. Qualities that unfortunately are in overabundant quantity in the modern Republican party (and to a lesser degree in the Democratic one.) 

> If people like you, the haters of both sides, would go away for five years, the rest of us could try to actually address the problems of this nation.  

If people like you, the whinging false equivocators, would go away for five years, then maybe there would be less confusion as to who messed things up in the first place. That way we would know to ignore them. Or at least not elect them to public office.


mantisdragon91
mantisdragon91

@reallife @mantisdragon91 More importantly since you don't even have the courage and integrity to honor your bet and stop posting, you must be a product of the conservative chicken hawk farms.

bobcn
bobcn

@TyPollard @erniet43 

I hear discussion of how the hard right tea party minority have to be pandered to and placated almost daily in the MSM.  The only time I ever seem to hear the left even mentioned is when someone is making a false equivalency 'they all do it' sort of argument to deflect blame from the latest right wing bad behavior.

shepherdwong
shepherdwong

@SixSixSix  .Social Security (and Medicare/Medicaid) has raised millions of elderly people from a miserable end living in abject poverty so, no, it's not "the greatest con job in American history." Yes, the cap on FICA taxes should be abolished but if you want to rail about regressiveness in the tax code, your time would be better spent focused on carried-interest, capital gains and estate taxes, not to mention corporate tax giveaways.

shepherdwong
shepherdwong

@drudown . Obviously, you're new here. In any event, Grunwald is certainly the least hacktacular partisan in the Swamp.

rohit57
rohit57

@WilfTarquin @rohit57 @starman I did not mention the House, did I?    The things I mentioned above are all true but Democrats have become incapable of acknowledging any electoral successes of the Republicans.    I can't argue with prejudice.

rohit57
rohit57

@WilfTarquin @rohit57 @grape_crush Well, actually the tax rates returned to the pre-Bush levels - but only for the rich as Obama wanted - this January 1.  That is the most recent example of a compromise.

But ask me for an example of a case where the Republicans compromised AND the Democrats showed appreciation for that.  In that case I might have a harder time.  Indeed Democrats are already denying that the tax increase for the rich on Jan 1 was any kind of compromise at all.
I am pretty much fed up with both parties.

rohit57
rohit57

@DonQuixotic @rohit57 @grape_crush Not really, because I am not an Obama hater.  I think he is a more or less OK president, although I do have some complaints.

What is interesting is the assumption you made about ME, based on NO evidence whatever.   I wonder what kind of pot you thought I was.

bobcn
bobcn

@grape_crush @rohit57

"Uncompromising Republicans threaten to crash the world economy if they don't get their way, and it's my fault - after the fact - that GOPers are too sensitive to criticism to compromise."

Not YOUR fault exactly.  It was that awful Obama.  

First he wouldn't play golf with them .  It's perfectly understandable that they responded by calling him a lying Kenyan socialist. After all, he'd hurt their feelings.  When he finally did play with them it just wasn't much fun anymore.

Then he wouldn't invite the nice tea partiers over to his house.  When he finally did invite them he wouldn't grill s'mores with them or give them foot massages.  If only Obama had been nicer to them maybe they wouldn't be threatening to destroy the world's economy again.  After all, they're very sensitive.

rohit57
rohit57

@TyPollard @rohit57 @grape_crush Sounds like Russell's paradox, does it not?  "The barber who shaves everyone who does not shave himself."  

But actually I do not hate the haters, I think they are like children who had realized that making hateful comments about Republicans is acceptable in polite society.   If Republicans were not around, they would find some other group. 

But America does have serious problems and we really need to address them.   The hatred is a distraction.

drudown
drudown

@bryanfred1 

What difference is the genesis of Social Security? By your own logic, Health Care's genesis should affect the GOP's reluctance to embrace Health Care reform....how?

bryanfred1
bryanfred1

Except that Social Security was established to be a national savings program, not a means of wealth transfer.  It is capped because benefits are capped.  You get back what you pay in (with no return, but that's another conversation; people would be better off getting the money directly and putting it in any kind of low-risk investment vehicle than cylcing it through Medicare for a <1% implied return).

Who you should be angry with are the politicans who spent the surplus the program ran for the first 70 years on general fund expenditures.  Now that we're on the other side of the demographic slope there will be shortfalls as far as the eye can see.  So either we find ways to manage the growth in expenses, or it and Medicare will eventually eat the entire budget.

SixSixSix
SixSixSix

@shepherdwong @SixSixSix I must take exception at being in violent near agreement. Stop being reasonable, it makes indignation so much harder. You can have your pick of the worst con job, I'll stick with FICA because nothing else robs so much money from my pocket and nearly everyone else. But the other ones are gross too.