Gordon L. Weil

Gordon L. Weil

Here’s a bold prediction: We aren’t going to go over the “fiscal cliff.”

In fact, the country was never meant to take it as seriously as it now does.

When President Obama and the Republican-dominated House of Representatives failed to agree on how to deal with the federal deficit, they were faced with the possible end of the Bush-era tax cuts. Without those tax reductions, rates would increase for everybody who pays the income tax.

So the two sides did the only thing they could: They simply delayed dealing with how to reduce the deficit.

But they added a default package of spending cuts and tax increases that were too horrible to imagine as a way of assuring that they would have to take some action the next time around.

That time has come.

The idea was that this month’s elections would yield a message from the American people that the losers could not ignore. Then, it would be easier to reach a compromise deal in which the winner would get more than the loser.

The result was that while Obama, promising the end of the Bush tax cuts on those with incomes above $250,000, won the presidential race, the GOP remained in control of the House.

The Obama victory and Democratic gains in the Senate and House tilted the balance to one side. But some House Republicans, now admitting that tax increases were inevitable, took comfort from their continuing ability to block an agreement they did not like.

Here’s the problem. Steps must be taken to stop the growth in the massive federal debt and begin to reduce it. At the same time, government spending helps the economy as it struggles to emerge from the recession.

GOP hardliners say that raising taxes by about 3.5 percent on the wealthiest people would undercut job creation. But they produce no evidence that the lower rates have done better creating jobs than what took place in the Clinton years with the higher rates.

Whether the Republicans win or not on that point, they will get most of what they want in the deal. There’s no doubt that there will be far more dollars in the deal from cutting government spending than there will be from raising taxes on the wealthy.

They have come up with a ploy that would allow increased taxes on the wealthy without raising rates back to the Clinton levels. The wealthy would not be allowed all of the tax deductions they currently receive, thus raising the amount of their taxable income.

While revenues are revenues no matter how you get them, there’s a problem with this solution. It would bring in far less money than the president’s proposed return to the Clinton tax rates on the rich.

This GOP proposal is meant to give Obama the appearance of having fulfilled his promise to increase taxes on the wealthy, while allowing Republicans to show they really protected their core supporters.

At first it looked like Obama was falling for the idea. Then, he let out the word that he wanted even more revenues from tax increases than he had sought during the last round of negotiations.

What worries observers and leads them to fear the “fiscal cliff” are the negotiations going on in the media. In the days since the elections, both sides have floated their ideas before getting to the negotiating table.

Setting conditions before people negotiate makes bargaining that much harder. When a party makes a concession, it has not only to explain what it got in return but also why it backed down from a position it had previously said was nonnegotiable.

We might like to believe that the two parties are trying to do what’s best for the American people, but it’s likely that it will be easier to conclude that what they are really trying to do is make the other side look bad.

Obama is the key to a deal. His position on the tax increase is clear and, according to national polls, has the support of a significant majority of the American people.

If he remains in campaign mode and lets people know that he is sticking to his position, but that the GOP will get deep cuts in government spending, he should be able to sell a deal.

But the Republicans know that neither he nor they want to be held responsible for pushing the country over the cliff. That gives them some bargaining strength.

Whatever the outcome, even if some matters are postponed yet again, the political risk of failure is so great, that, just as intended, the threat of the “fiscal cliff” will force a deal.

GORDON L. WEIL, of Harpswell, is an author, publisher, consultant and former public official.


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