The GOP's Best Strategy Might Be To Fold Right Now

A blog about business and economics.
Nov. 16 2012 11:40 AM

The GOP's Best Strategy Might Be To Fold Right Now

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WASHINGTON, DC - NOVEMBER 9: U.S. Speaker of the House Rep. John Boehner (R-OH) addresses the media during a press conference in the U.S. Capitol building November 9, 2012 in Washington, DC.

Photo by Allison Shelley/Getty Images

To echo what Brian Beutler wrote yesterday, a few conversations with folks on the Democratic side this week have persuaded me that the GOP's strongest tactical move in the "fiscal cliff" standoff would be to surrender as soon as possible.

Senate Democrats already passed a bill that extends the "middle class" Bush tax cuts while allowing the tax cuts for the rich to expire. That bill doesn't achieve the Obama administration's $1.6 trillion revenue goal (it nets a bit less than $1 trillion), doesn't address the budget sequester, and doesn't say or do anything about the debt ceiling. If House Republicans hustle back to town between Thanksgiving and Christmas and pass the bill, then Obama will obviously have to sign it. And that means he'll achieve a very important policy goal of his.

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But it also means that in the New Year, Republicans will have their leverage back. The practical impact of the budget sequester will be delayed through administrative money-shifting, but it will still be a looming threat and Republicans will be well-positioned to insist that it be replaced with an all-cuts strategy. They'll argue that Obama already got higher taxes, and the sequester is still threatening because he's obstinately refused to put forward a plan to cut entitlement spending. Then behind the sequester will be the debt ceiling, providing another opportunity to press the "Boehner Rule" whereby higher borrowing authority has to be offset dollar-for-dollar by spending cuts. That gives the GOP objective leverage. And what's more, Democrats are eager to get this thicket of topics off the agenda so they can move on to other things and will thus be relatively inclined to bend.

Now don't get me wrong. What I'm outlining is by no means a brilliant win for the GOP. Obama will have achieved a key objective on the Bush tax cuts, and the Republicans will have paid a price for losing the election. But relative to the other scenario it looks good for them.

The alternative is to go "over the fiscal cliff" at which point all the issues blend together and the baselines are reset in a much more favorable way. With 2013 baselines in place, Obama and the GOP are just arguing over how much to cut taxes by and Democrats are free to roll the sequester and the debt ceiling into the overall negotiation about the precise size and contours of the Obama Tax Cuts. That's a very favorable position for them. Republicans holding up tax cuts because they refuse to increase defense spending or avoid a statutory default wouldn't make any sense. Obama's not going to get 100 percent of his objectives, but he'll have a very strong hand and the odds of basically rolling the House Republicans get pretty good.

Now it continues to be the case that a scenario where the GOP just folds quickly and cleanly seems very unlikely. Democrats don't seem to have given much thought to that scenario, precisely because it would be amazingly out of character. But I'm increasingly convinced it would be the tactically savviest move. Surrender on middle class tax cuts, and fight on the sequester and the debt ceiling.

Matthew Yglesias is the executive editor of Vox and author of The Rent Is Too Damn High.

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