Reich writes: "House Speaker John Boehner's failure to persuade rank-and-file House Republicans to raise taxes even on millionaires fits the fanatic's strategy exactly."
Portrait, Robert Reich, 08/16/09. (photo: Perian Flaherty)
FOCUS: Call Their Bluff and Go Over the Cliff
26 December 12
resident Obama is cutting his Christmas holiday short, returning to Washington for a last attempt at avoiding the fiscal cliff. But he’s running headlong into the Republican strategy of fanaticism.
It’s a long-established principle of game theory (see Thomas Schelling’s classic 1956 essay in the American Economic Review) that a fanatic who restricts his freedom to avert a disaster puts maximum pressure on his opponent to give ground.
In a game of highway chicken, for example, the driver that can’t swerve because he’s tied his hands to the steering wheel and chained his foot to the accelerator forces the other to swerve in order to avoid crashing.
The trick is for the first driver to convince the second that he’s crazy enough to have committed himself to instant death if the second doesn’t act rationally.
House Speaker John Boehner’s failure to persuade rank-and-file House Republicans to raise taxes even on millionaires fits the fanatic’s strategy exactly. Boehner can now credibly claim he has no choice in the matter -Republican fanatics in the House have tied his hands and manacled his feet — so the only way to avoid going over the cliff is for Obama and the Democrats to make more concessions.
The White House’s hope of getting the Senate to pass legislation that raises taxes on the wealthy in order to pressure Boehner won’t work because the legislation can’t possibly get through the House. That’s the point: Boehner has demonstrated he has no choice; the fanatics are in charge there.
Obama could decide going over the cliff isn’t so bad after all -as long as he and congressional Democrats introduce legislation early in the 2013 that gives a tax cut to the middle class retroactively to January 1st (extending the Bush tax cut to the first $250,000 of income) and restores most spending — and Republicans feel compelled to go along.
But with Boehner’s hands tied and the fanatics in charge, this gambit becomes far riskier. What if we go over the cliff and House Republicans continue to hold out against any tax increases on the rich while demanding major cuts in Medicare and Social Security?
The path of least resistance is for Obama and the Democrats to offer to keep everything as is, through 2013 -extend all the Bush tax cuts and continue all current spending (lifting the debt limit along the way) -unless or until a “grand bargain” on the budget is agreed to before the end of next year.
This is likely to satisfy enough Republican fanatics to gain a majority in the House. And it would avoid the fiscal cliff, kicking the can down the road and giving everyone more time.
Deficit hawks in both parties won’t like it, but that’s okay. Unemployment is still way too high and growth too meager to justify trimming the deficit any time soon.
The real problem with this gambit is it doesn’t change the game. Even down the road, Boehner’s hands will still be tied and the fanatics will remain in charge — which will give Republicans the stronger position in negotiations leading to a “grand bargain.” Compromise would have to be almost entirely on the Democrats’ side.
That’s why I’d recommend going over the cliff and forcing the Republicans’ hand. It’s a risky strategy but it would at least expose the Republican tactic and put public pressure squarely on rank-and-file Republicans, where it belongs.
The fanatics in the GOP have to be held accountable or they’ll continue to hold the nation hostage to their extremism. Even if it takes until the 2014 midterms to loosen their hold, the cost is worth it.
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Comments
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Once again Barbara you speak with common sense. Thanks.
Do you need me to translate this into 2nd grade prose---with colorful pictures?
It might help the Republicans understand how things work. Their soft brains are enclosed in rock.
"RepubliTBager criminals are not interested in leadership or being led. They are interested in grinding the economy to a halt, increasing joblessness and then cutting benefits to those in need. Their mission is still to make the president fail."
Those who want to save the defense industry gravy train are the most likely to want to compromise,
http://readersupportednews.org/pm-section/99-99/15242-dennis-kucinich-and-peace-lame-ducks-have-the-power-to-change-the-us#comment-261343
Wall Street created both those bubbles. The housing boom did not start till AFTER the Dot Com fell to pieces in 2001. The housing boom went on for two years before an apparent bubble was formed. These were also regional bubbles and not one giant one.
We had an obstuctionist Congress then as well but hey who wants to count that for Clinton, right?
I fully expect their nonsense to turn out even worse for them (better for us) in future elections. They have failed to ask voters what they really want, instead trying to sell us on a corporate dominated nightmare of a few bad business "leaders" trying to run the government for their short-sighted interests, crippling the productive society we enjoyed when honest work was justly rewarded, and gambling was limited to a fraction of the wasted manipulation of markets.
The ultimate freeloaders have been bailed out far too often with trillions of our markers. Most of them are plenty smart enough to make money honestly, but don't see any reason to do so when it is so easy to take other peoples' money, get bailed out,and stay almost perfectly free of any civil or criminal consequences. Why do we allow this, much less continue to encourage such bad behavior?
In fact, the bump, if we do go over it, will achieve more deficit reduction than what is currently being "negotiated" and it will forever cement this Congress as the do-nothing Congress of all time.
Over the cliff isn't going to crush the poor or the sick or the unemployed. Most of us are already struggling, growing our own food, cutting back on frivolities, using the emergency room, cancelling insurance policies, driving less, eating Ramen noodles. Austerity will NOW strike the well-to-do. Nobody buying stocks, cars, insurance, houses, borrowing money, going to the movies, etc. etc.
Our value to plutocrats is only as consumers, and to the degree that we can't ... we won't. Let them eat the remains of their caviar and cake and drive around in their BMW's, and Range Rovers. They can all stay at the world's tallest hotel in Dubai.
Let the GOP hardliner, no-brainer, Rush trained sycophants collect the reprisal they deserve for freezing government and progress for the past 30 years. Intelligent progressive ideas and effort will pull us through the crises they have created. Let them have what they have wanted ... free fall for the rich. They've got a LOT more to lose.
Banks won't lend you the 2.5% fixed rate mortgage money from your "free and clear" home equity to buy that new car or add on or pay off the kids' college loans. They'll blame Obama or FNMA and use the profits from high interest income to buy back their stock.
'Grinding poverty' arrives when the second job disappears or your employer off-shores your job or your business closes because the cash flow can't meet your payroll when the insurance policy increases another 15% ... mostly because lenders are hoarding their profits awaiting higher interest rates.
The tax increase you encounter - because Mitt and Adelman are keeping money offshore and only paying 15% when they need a few more bucks - will only add about about 15 to 25 cents an hour to what is deducted from the $5 or $10 an hour you can pay yourself or earn in THEIR FREE MARKET.
Most of us are PRODUCERS in just such an un- (or under-) compensated, multilevel vertical monopoly machine that is protected by OUR government - which THEY own ... or plan to buy.
I think (hope) that Professor Reich has got this scenario somewhat backwards; and I think possibly, Obama has been playing a long chess game against Boehner, who has been playing checkers. (POSSIBLY)
The wild card is if the Republicans don't elect Boehner as Speaker.
Perhaps the negative votes are from those who don't believe Obama is playing a 'long' game. And we have seen him cave, often enough, over the past four years (for all the good it did him/us!) so there is now little trust...
My personal concern is that the Repugs have managed to get him to put Social Security and Medicare 'back on the table,' after all the promises about that not happening.
You got my point about Hope. I even stated that my post was based on hope. Thanks.
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Thanks. I really don't mind the negatives, I just would like to hear why. Usually, I get them because I didn't explain myself clearly or I am just being a wise ass and probably deserve it. This one I just didn't get the why.
I would be curious as to who you think Obama's constituency is that is manacling him in place? As far as I can see, the constituency that influences him the most is the banksters and corporatist criminals who use the revolving door described so well in the movie "Inside Job" and Matt Taibbi's articles. He even brought in Summers and Rubin as economic advisors, when they were responsible for pushing the Gramm-Leach-Bli ley act repealing Glass-Steagal - which cleared the way for the financial disaster of 2008, only 8 years later.
Robert Reich does not have his scenario backwards, but at this point if Obama really does come to some 'Grand Bargain' that hurts seniors, the poor, and the middle class, cutting Social Security (which is NOT an entitlement but paid for by citizens like me all my life) then that is going to be his legacy. Along with destroying the Constitutional freedoms, that is.
What he will really do, nobody knows. But we will ALL pay for it, I am sure.
I really believe that a significant number of Republicans are not locked in. And, since the party is fractured the ones that are not locked in have to compromise from a very weakened position.
I believe Obama has actually heard the Progressive no cuts to SS loud and clear. I really doubt that there will be any chained CPI or other cuts made. The tax increase will likely be compromised to 400K or even 500K. I am not saying that Barack Obama is a Progressive! I also said that there I hope he is playing the long game. My reason for that hope is that so many issues have turned in his favor over time. It could be luck, but it also may be some smart gambles as well.
Lastly, it does appear that Obama is acking away from the Grand Bargain, which is good because that is basically handing the defined issues back into the Republican hands.
Of course the Constitutional freedoms are an issue, but lets get past these 4 years and make sure that we get a President in 2016 that will address that. There are just too many pieces of America tossed into the gutter since the Right gained control of the debate around 1978 to fix them all at once.
If only such a "long plan" addressed (EVEN THEORETICALLY) the impending world climate crisis, the threat of religious righteousness, costs of governmental cleanup responsibilitie s in the wake of exploitative destruction of Earth's resources, and/or the challenge of medical science demands in a changing world.
UNFORTUNATELY it is more likely he is thumb tacking his greatness on the bulletin board of high school "most likely to"'s rather than commanding a Mount Rushmore recognition of greatness. We will be cajoled to grudging incremental compromise rather than being led to a new age of understanding and determination.
It is time for independent progressives to move potential candidates to every Republican (and Blue Dog) district and launch a serious campaign to unseat these lobbyists. Then, the blackmailing will be to pursue a progressive agenda, including campaign finance reform, or be exposed as a lobbyist. After all, why should we tollerate any elected official voting for an item supported by or benefiting a contributor to his/her campaign? Clearly a conflict of interest; our interest.
I received an e-mail today from Jim Wallis (of Sojourners) who is and has always been a progressive Christian. He has just written a book about the Common Good (I'm not advertising, just pointing out that there is some efforts out there at educating people about what a real American agenda should be).
Not everybody is of the Christian religion, but for those that are, it will be necessary to reach out to all those "red" counties in both "red" and "blue" states with information about the need to support the "common good." This will be a very difficult and dangerous task at best, especially if these people go to churches which have been preaching that Obama is evil. It will take a lot of guts and even more knowledge about their positions to be able to achieve it.
). Sweden, Norway, Canada, the UK, Belgium, Germany, and a hundred other nations, are anywhere from 35 to 60% of GDP--and have national health care. So, what are the 1% bitchin' about?
Our poverty rate is around 15% also, which, to me, is criminal. Come on up to Lower Wacker here in Chicago, and we can hunker down in freezing temps in a cardboard box with about 400 others. Doesn't this bother anyone with a heart and conscience? Whenever I'm there, I try to give rides to shelters for these pour souls, but most are beyond caring even. So I'll give them however much I have, and tell them to take care; that's all one can do sometimes.
When the GOP says the US has one of the highest tax rates in the world, their either lazy, or, more likely, stupid and greedy.
"Hoist on their own petard", but it means the same.
It's not possible to grow (restore) the economy without "growing" the middle class. I see no evidence "he" is going to take from the seniors and poor to "give" to the middle class.
The rich pay capital gains rates as primary taxes and avoid "wage" situations.Many use tax credits and like devices to avoid paying any taxes. E.g. GE Capital gains rates(15%) are lower than the average tax rate of 24% paid by wage earners.
Without a working middle class to sustain the economy a number of things happen: (1) there is no ladder out of the lower class meaning that we have a permanent underclass, (2) more people use unemployment benefits, Social Security, disability and similar programs, (3)accordingly government deficits rise and (4) revenue drastically drops.
It isn't an either or proposition. The middle class is the life's blood of our economy if it is to function other than it does now--primarily for the benefit of the ultra-wealthy and multi-national corpoations.
The working class, whether employed or not, has not come up with an effective counter strategy to blow plutocrats and their handmaidens in government out of the water. The numbers are on the side of the working class should an effective strategy for countering the 1% be found and communicated effectively to the populace.
I assume the worst, and hope for the best. I assume that they will gut Social Security, Medicare, Medicaid, and destroy many other supports for the poor, sick, and elderly. I have to assume this: my husband has cancer, and without him, and without a job, I will be unable to pay for my own medical care. It isn't a game of bluff for us; the stress alone has been making my husband's illness worse; it is already a crash, already killing people.
This isn't a game; that's something that goes right over Congress's and the President's heads: somehow they do not think that there are real people that are going to be affected by their games. I have tried not to pay too close attention (except telling them not to take away SS, Medicare, and Medicaid), because I am already stressed out enough.
America has been called an "experiment" of democracy sometimes; I think the Republicans want to call it a "game of chance."
A POLITICIAN is one who seeks the appearance of progress or resolution of differences while accepting the half-'truth' that allows half-a-can to continue rolling down the road while basking in the glow of 'compromise'. Hardly the stuff of which generals are made.
Focus groups don't strengthen leadership qualities. They castrate leadership tendencies ... JUST A THOUGHT!
I hate to say it, but doesn't this speak for the need for a Constitutional Amendment?
My wish list would also include the Senate: if it is not supposed to reflect population, then the Senate at the very least should never need a "super-majority " beyond 51 votes for appointments, bills, and the like, because those low-population states can block any bill, any appointment, or any business of this country at all with those "Senate rules" that force them to have 2/3 majority for many items. Yes, blame Wyoming and Alaska, not just Cheney and Palin, for the kinds of tp attitudes that have brought our country to its knees.
Curious, I dug into our dusty files and plugged our 2011's Adjusted Gross Income into the 2000 IRS tax table, the last year of the Clinton rates.
Results: from 2011's 13.89% of AGI to a 2012 17.21%, or...for us... an additional $2,018 in federal tax.
We'll manage somehow. Our income doesn't reach even a quarter of the $250K-subject-t o-taxation that Obama campaigned on. We're retired teachers, so we'll have to find a bargain brand of caviar...
Do some back-of-the-env elope scratchin' yerselfs... whatcha come up with?
$100 per month ($1200) co-insurance for medical benefits from my husband's employee plan;
$4000 per year for the hospital costs (our portion, the cap at the top for the hospital);
$25 per every two week visits (about $600 per year) for the oncologist co-pays that are not covered by the hospital cap;
various prescription drugs (about $600 per year):
All tolled: $6600 per year. This does not count other services we have needed, or more heat in our house, due to his and my disabilities. Nor the extra gas because he no longer drives.
Now, if I add an extra couple thousand to that, I'm sorry, but we will be very strained. I am not willing to pay it, but I will wait and see, because there is no way that we can afford to have many more thousands than that cut from Social Security, Medicare, and Medicaid, so I will just have to cut something nice from our lives. My husband and I are in our 50s, and he probably won't reach 65.
If you have enough money that it doesn't matter, then you can afford more taxes anyway. It does matter to us, but it is a life and death situation for us right now that we can't afford to capitulate on.
Personally, I look forward to being able to call that legislation the "Obama tax cuts for the rest of us".
My heart is touched; thank you for sharing your concerns, for they are widely held.
We are fortunate to wear a money belt that can be tightened a notch without seriously affecting our financial health; my point, I hoped, was to show that if we could manage, then the Obama-targeted $1/4-million-pl us people should not feel a squeeze on their own vital signs and would easily bear the the increases that weigh heavily on the basic care you describe.
I'm saving both the main article and our serious exchange. Thank you.
Less government is our rallying theme
As we tell you how to live don't you dare make a scene
Give us your tired, your poor, your elderly, and sick
If they'd lived better lives they wouldn't get our sharp stick
Too bad how life dealt them this lot
Help only goes to them that's got
Tax breaks will soon be on the way
For our friends who don't want to pay
Trickle down didn't work before
But you've forgotten so we'll try it once more
We'll play on your fears that some get a free ride
When the only ones that do are on the inside
Sorry you've no food on your table
Don't get sick cause you might not be able
To pay for your health
Unless you've got lots of wealth
Kick the can and delay
Will be our answer for today
The only + for the 47-99% (for there are many minuses if we go over the cliff) is watching the "tears" run down Boner's yellow-orange face. Fox had better have that picture too since the other big 5 will show the clip!
Don't forget that if we go off the cliff, we land in a completely new policy world !
So the Democrats don't have to be bound by any deal they made before the new policy world comes into effect. It's 2013 and the Democrats will be able to propose tax cuts and policy changes based on the new tax and spending baseline, not the baseline that we have now !
So, first on the agenda, ...See More
entitlement savings -like ending Congressional free health insurance for life. Or pinpointing military programs that should be cut, Proposing end to big pharma advantage in Obmacare and Medicaid. Blah blah. Actually I totally depend on SS now, but I'm very creative and practical and pissed.
NO MORE BRIBES FOR LIVES. IT'S A MATTER OF DEGREE THAT WILL DETERMINE WHO WILL STARVE, LIVE OR DIE.
WILL THE GOVT PROTECT THE NANNY STATE FOR THE RICH OR LET ALL THE AMERICANS FEEL THE PAIN? WILL OUR ECONOMY BE DRIVEN INTO THE GROUND?
Thanks sk for bringing us back to reality,
There was calls by Bernie Sanders, Dennis Kucinich and incredibly 30 others for Defense Cuts. There was no military cuts after the Cold War ended. It is like an uncontrollable growth. Another name for uncontrollable growth is cancer.
Google, when it comes on line, Dennis Kucinich and Lame Duck, He Might Soar Rather Than Wind Down
After all there would be no current fiscal cliff debate--if Wall Street had not pressured Congress to create an unconstitutiona l super-committee to slash the budget--with an unconstitutiona l default to automatic budget cuts should the super-committee fail to enact Wall Street's agenda.
The legislation was Wall Street's version of 'Heads I win. tails you lose.'
And that noted Wall Street-promoted progressive Barry Obama failed to mention this scam because...
So why the rush to siphon money from entitlements to Wall Street?
Especially since that 'national debt' includes a whole lot of hand-outs and bailouts to Wall Street--many of them off-budget and bigger than TARP.
I would not be surprised if Barry Obama--Wall Street's gift to the Democratic Party--tries to privatize Social Security.
All in the name of bi-partisanship , of course.
Obama won a great victory in November but he didn't gain control of the House and American politics didn't move very far to the left. There's lots of talk about "the new majority" and that sort of thing but we're still far removed from economic and social justice. Brace yourself for some difficult moments in American politics.
Robert: the White House doesn't have to convince the Senate (or the House) to raise taxes on the wealthy. That happens automatically at midnight December 31 with the expiration of the Bush tax cuts.
And, note, it is not a tax increase, it is merely a restoration of the tax rates of the Clinton administration -- the most prosperous years of the 20th century.
Although an Executive with vision and determination could LEAD us through this fog of contrived uncertainty, there's no excited expectation of a future with a positive outcome.
Instead we discouragingly anticipate among differing slope angles on the downward spiral of incomes, employment, education, environmental concern including air, food and water quality, basic Constitutional protections and guarantees, peace, and cooperation among differing interpretations of what 'freedom' means.
The most likely outcome is a plutocrat owned media heralding an agreement to "kick the can" of decision-making down the road for a couple of months to allow pundits to sell the theory that it is too expensive to care about sick, old, poor or less educated 'disposables' among us AND that the greatest investment of our labor and toil should be taxation that eradicates the nebulous 'terrorism' that hates our (somewhat unsuccessful) way of life ... while (of course)keeping exemptions from most taxes to insure that the wealthy and their heirs continue to grow in power and influence so they may maintain their status as "Job Creators".
I hope to toast the twelfth bell as the 'do nothings' are forced to deal with what they have broken because no REAL leaders have voice.
Plans and policies for a NEW AND BETTER FUTURE could be the focus. No speeches, talking point memos or teleprompters ... hosts would be free to inject 10 second comments ... offerings by participants would be limited to 60 seconds, speakers would be selected by pressing the button and CUT OFF at 60 seconds.
I bet the ratings would exceed ALL reality TV.
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