December 7 2012

Why the Fiscal Cliff Negotiations Are Going Nowhere Right Now

Charlotte Hays

Charles Krauthammer has put his finger on the reason that the so-called fiscal cliff negotiations are so far going nowhere: only one side is negotiating. Krauthammer writes:

Let’s understand President Obama’s strategy in the “fiscal cliff” negotiations. It has nothing to do with economics or real fiscal reform. This is entirely about politics. It’s Phase 2 of the 2012 campaign. The election returned him to office. The fiscal cliff negotiations are designed to break the Republican opposition and grant him political supremacy, something he thinks he earned with his landslide 2.8-point victory margin on Election Day.

…Obama’s objective in these negotiations is not economic but political: not to solve the debt crisis but to fracture the Republican majority in the House. Get Boehner to cave, pass the tax hike with Democratic votes provided by Minority Leader Nancy Pelosi and let the Republican civil war begin.

It doesn’t even matter whether Boehner gets deposed as speaker. Either way, the Republican House would be neutered, giving Obama a free hand to dominate Washington and fashion the entitlement state of his liking.

This is partisan zero-sum politics.

The president is dominated by a set of political beliefs, and the voters gave him another four years in which to remake the U.S. What will happen if the GOP can’t stop this?  There is a fascinating piece on National Review about Michigan, which has tried both the Obama approach and a GOP approach to rescue its wrecked economy.

Jillian Kay Melchior writes:

From 2003 through 2010, under the direction of Democratic governor Jennifer Granholm, Michigan implemented the Obama model for financial catastrophes. During her tenure the state ran annual deficits of around $1.5 billion, according to the Department of Technology, Management, and Budget. Nonetheless, Granholm doubled down on spending, or “investment,” as she termed giveaways to public employees and favored big businesses.

Granholm was governor for eight years, a period when Michigan’s annual expenditures went up by more than $10 billion while population declined.

Predictably, Granholm’s strategy turned out to be disastrous, stifling the businesses that create jobs and drive economic growth. Even before the 2008 financial crisis, Michigan was weathering a one-state recession.

 Governor Rick Snyder, a Republican, took office in 2011. He immediately began the process of tax reform, scrapping the state’s cumbersome business tax and imposing a flat 6 percent corporate tax rate. Snyder also instituted spending reform and pushed through laws that made it easier for cities to control their finances by keeping public sector unions under control.

Though Snyder has been in office for less than two years, the initial results have been impressive. Last year, Michigan’s job growth outpaced the rest of the country’s. Bureau of Labor Statistics data show that throughout Snyder’s first 22 months, the state has added almost 80,000 jobs.

During Jennifer Granholm’s last month, unemployment was at 11.2 percent; now, it’s at 9.1 percent. Furthermore, CNBC ranked Michigan sixth in the nation for job creation this year, and the Chamber of Commerce placed it in the top five for short-term job growth. The economy is expanding, too. Last year, it grew 2.3 percent — the sixth-best figure among the states, according to the U.S. Bureau of Economic Analysis.

This is what the two parties should be debating on Capitol Hill—but it’s not because there is no debate. The president has other fish to fry. So fasten your seatbelts, America.

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