They Hate Each Other, They Really Hate Each Other


Ezra Klein has been reading through all the fiscal cliff tick-tocks—and thank God for that, since I sure didn’t want to do it—and extracts the ten juiciest tidbits today. They’re pretty good, and you should take a look if you haven’t already had your fill of fiscal cliff posturing. Here’s #1:

From the National Journal: “The speaker’s team fell prey to overconfidence. They just didn’t believe that Obama meant what he said about raising tax rates for the wealthy….Yet when Boehner’s aides started haggling with their counterparts at the White House in the days before Thanksgiving, they ran into a wall. There would be no deal without higher tax rates on the wealthy and an extension of the debt limit, the president’s aides said. Take it or leave it. The president was willing to dive off the cliff.”

This is more important than it might seem: If the White House had agreed to raise revenue through tax reform, there’d be no way to raise revenue through tax reform in future negotiations. Because the White House raised its revenue through increasing rates, it can still raise revenue through tax reform in a future negotiation.

Ezra’s comment is important, though I imagine it cuts both ways. It’s true that if you do tax reform now, you can’t use it to raise revenue in the future. At the same time, if you raise rates now, you also can’t use that to raise revenue in the future.

Still, I guess the thinking here is that tax reform is coming, and it’s going to focus on loophole closing, not rate increases. This means it’s best to leave plenty of loopholes to close as bargaining chips.

We’ll see. Given the obvious, and very genuine, animosity that Democratic and Republican leaders all have for each other right now, it’s not clear that tax reform is very likely. These guys really, really don’t like or trust each other. The upcoming negotiations over the sequestration cuts and the debt ceiling should give us some clues about whether they can still deal with each other in any kind of professional way.

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