Cliff Climb-Down: What's Not to Like?

We learned over New Years that certain Republicans have a very hard time saying yes, and certain Democrats have a very hard time accepting wins!

Let's just say this: A deal that removed permanently the threat of an Alternative Minimum Tax springing on unsuspecting middle class households; that embedded the tax on estates of more than $5 million at a 40 percent rate (up from 35 percent); that preserved long-term Federal unemployment relief for all of 2013; that permanently raised taxes on household income over $450,000 while permanently freezing rates on those below $250,000 and limiting some exemptions and deductions for those at $250,000 and above; that raised taxes on dividends and capital gains by 5 percent while leaving in place additional levies on dividends to help pay for ObamaCare -- all with absolutely no price paid in terms of additional cuts in social programs or reduced entitlements -- should on the whole be considered a great victory for Democratic Party principles. Yet the whiners like Paul Krugman (who again seems to be out of the running for a Cabinet post) keep trying to increase Obama's unfavorable ratings among his own party by complaining that we didn't get the perfect result.

Liberals like Krugman (who has written with distinction on the economic contradictions and idiocies of the Far Right) need to adapt to the reality of governing as distinct from the role of opposition party: you need to be able count (votes) as well as to choose (compromise). The latter-day Clinton admirers seem to forget Bill's maxim - don't let the perfect become the enemy of the good! Grow up, liberals, and learn to live with the hard task of power, or you'll lose it to the yahoos you so abhor by 2016.

As for those Yahoos (formerly known as the Republican Party), let's look what they got: the temporary Bush Tax Cuts finally made permanent for 98 percent of individuals and 97 percent of small businesses; no additional stimulus spending; preservation of Congressional leverage via the debt ceiling; a two-month trigger left ticking on the "sequestration" aspects of the Fiscal Cliff that badly hurts Democratic program priorities as well as military spending; a 50 percent reduction in Obama's tax revenue increase target, plus the $200 increase in his benchmark for the highest marginal tax rates on families; a permanent settlement of the estate Tax cut-off at $5 million with only a modest increase in the rate, both more advantageous than when Bush II took office; elimination of the Obama payroll tax cut for employees; and permanently limiting the reach indexing the MTM to inflation -- all while keeping in place all the special tax "loopholes" for carried interest, and corporate jets, and oil companies, not to mention charitable, mortgage and state tax deductions -- what's not to like for a good Republican here? And yet they sulk and weep and vote "no" in droves. Hang around evangelicals and you get a taste for purity, I suppose.

It would seem that both parties should sober up and approach the next phase of the fiscal and budgetary debate with a clearer view of their own priorities, at least to exclude from those lists the necessity to make the other side say "uncle" in a publicly humiliating manner. For a president who "open-mic"-ed his prospects for more "flexibility" once re-elected, he should stop running for re-election finally and use that flexibility to suggest a responsible path to entitlement preservation reforms: the general public, if not the Democrat Far Left, is ready to hear it. But only after Republicans take the debt-ceiling default scenario off the table.

Republicans have more than enough leverage in terms of the sequester trigger and the government funding "shutdown" option in March to win some concessions from the Democrats. But they in turn should understand that their ante on the table must be more than a package of "poison pills" regarding social welfare spending and resistance to tax deduction reforms -- after all, they themselves proposed capping deduction for the rich just a few weeks ago. Surely what was possible before Christmas has not been made irrelevant by a "Cliff" deal that delivered on a lot of their tax-related priorities.

It seems odd in the end -- and maybe a reflection of a political and economic society (apart from out here in Silicon Valley) that has fallen in love with chronic pessimism as the new "in" disease -- that political leaders have so taken to promoting their losses more than their victories. Has the culture of "retching across the aisle" introduced by the Tea Party so infected everyone else that they simply can't abide the idea of a "win-win" result?

And by all means let's agree on corporate tax reform. Democrats and Republicans: recognize that our nominal corporate tax rate is the highest in the world, but nobody pays it because of all the deductions and exceptions. Those on the Left should relax their reflexive opposition to "repatriation" of the trillions in overseas earnings now held offshore to maximize "shareholder value" (a duty under state corporation law) by avoiding a U.S. tax bill as allowed by law ). You can't count a repatriation deal as a tax cut because those taxes will never be paid anyway under current law. But those on the Right must recognize that any deal must both have teeth to prevent abuse of the repatriation privilege -- if only to keep the playing field level for those US corporations (like utilities) that mainly just do business here and thus don't enjoy the tax -deferral privileges of multinationals like Cisco and Apple. It's possible to have "win-win" corporate tax reform, too -- if only the extremes of both Parties weren't so in love with preserving their self-portraits as losers (in need of donations, of course)!