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Welcome to The Journal Editorial Report I'm Paul -- you go heading into Friday's fiscal cliff talks with congressional leaders.
President Obama gave us a hit Wednesday of this negotiation strategy repeating his intention to immediately raise tax rates on top -- errors.
When it comes to the top 2%.
What I'm not going to do is to.
Extend it further.
But tax -- for folks who don't need it which would cost.
Close to a trillion dollars and it's very difficult -- let's see how you make up.
That trillion dollars if we're serious about deficit reduction just by closing loopholes and deductions you -- the -- tends not to work.
But does the president's math.
And job let's ask Wall Street Journal columnist bill would -- senior economics writer Steve Moore and Washington columnist.
Kim Straus also Kim.
The president won reelection was this the hand of magnanimity reaching out to the Republicans and saying look I.
I wanna deal here and let's let's let's all.
Sit down and and negotiate together.
It's great it's what the president says all the time but if you listen to that press conference what he seems to be saying is.
Look the biggest wish -- -- this wish list for his liberal partisans and has become gospel.
As letting these tax rates expire and so while the Republicans have moved that they are offering revenue this is a change from their position.
While the framework -- potentially there for a deal the president is saying no compromise no compromise what's his strategy.
-- bill here and what is it what is he thinking because obviously if we don't get a deal.
We do go off the tax cliff.
And that with consequential danger to the economy right -- you say that I -- absolutely right you're right the math doesn't add up.
The politics adds up I mean -- -- so well.
I'm afraid what's gonna happen when not only gonna get bad policy.
Because -- a tax increase and so forth.
But we're going the Republican party -- conservatives that oppose that bad policy are also gonna get the blame for the consequences.
And this is -- because if the economy goes into the tank because we get this stuff.
The Republicans will because we don't get whatever way the Republicans going to be -- for being obstinate.
If they -- some of the tax increases.
Or if they go along their own -- is gonna revolt over and over the tax increases.
So it's a it's a no win situation and the reason is is -- sort of alluded to.
This is -- president.
Who uses the word compromise.
As a substitute for actually compromised.
That's solidified by -- press corps that doesn't ask him a single question what are you willing to give.
You know when John Boehner peers are all saying are you willing to accept higher rates.
No -- says what are you going to do about entitlements and or or anything there's no.
The president whether he will compromise what that would look like Steve.
What what do you think the Republicans are ought to do here is there a way out for them or they just going to be -- back into a corner where they have no choice but to concede that they have to raise tax rates or else.
Go over there you go over the Clinton get Blake cliff and get blamed for that.
Well it's a tough situation for them there's no question Bob because he's you know the default position if we don't do any thing.
It's for the taxes to go up everybody on January 1 -- something.
I think both sides want to avoid it's a very -- the thing that happened this week I -- to start the week was who was the first.
Person that -- come -- -- with in the White House since his election.
The labor union leaders the labor bosses write that tells you a lot about who's driving policy.
It's at least back at the start of the second term and the labor unions have basically said we want no compromise on this we'll take -- -- the people so I believe Paul that this president is important for a fight.
-- -- he wants to take this act case to the people and the Republicans give -- right because Republicans have moved a long way saying look we'll negotiate that's.
But you know when I talked had to write a minority leader he had this up past week and the and the senate Mitch McConnell said look will -- -- -- what the one that we're not gonna do is raise these tax rates because they genuinely believe and I think the right about this.
Raising those tax rates could cause a double dip.
We're -- right OK fair enough but then that means that what's the alternative if the president's half insist on raising tax rates and the Republicans -- no.
All the president has to do is let the tax because taxes -- -- on January 1 he gets the tax increase anyway.
And then he can just beat the heck out of the Republicans for blaming whatever economic consequences have happened.
And then and then in two months they're coming back to him and saying OK we give -- but he's already got the tax -- so my question -- -- Steve is.
What's the way out here is there a way out that the -- -- see how the Republicans.
Well the Republicans are we showed in our editorial this week the numbers do add up the Republican should basically say look we will close these loopholes.
And by the way if you do that the people get hit the hardest are the -- but I think the most important outcome is to make sure that Barack Obama does all in this economy I mean you've seen what's happened to the stock market in the last week since Obama was reelected and he's been talked about raising these rates we've watched over 650 points on the Dow Jones up I'm not so sure that the ambassador committee you're -- public really wants though -- -- rates to rise as much as broccoli.
-- about and just on the -- if you close if you put a cap on deductions of 50000 -- -- predicted right over ten years the estimate if you get almost 800 billion in tax -- that's which has its policy center right which is a center left center left operation but that's and that's roughly the same as you get from raising the tax -- the president look you outlined in the editorial page several possible compromises the truth is there are compromises that he made.
But I don't think the president's interest in those the are the actual economic things this is a political fight that he wants that he's pushing and he has a lot of cards Kim so you think we're gonna go over the cliff for oil or not right now what -- the.
Look -- do you think the president is playing a slightly dangerous game and that if his argument -- is bad here is that the Republicans are going to be more responsible -- him.
He better -- they are because otherwise he could end up getting some blame for pushing -- so.
Yeah that's right when these things tend to go bad both sides get the blame so I think it's it is a very high risk game particularly with the economic growth.
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