Left Eyes Fiscal Cliff As Opportunity

‘Emboldened Liberals’ Are Prepared To Jump The Fiscal Cliff and Trigger ‘A Significant Recession’ Because They Think It Would Give Them ‘More Leverage’

U.S. Chamber Countdown as of Nov 26, 2012

Today in Washington, D.C. - Nov. 26, 2012
The Senate will reconvene at 2 PM today and resume consideration of S. 3525, a bill concerning hunting and sportsmen. At 5:30, the Senate will vote on a motion to waive the Budget Act with respect to the Reid substitute amendment to S. 3525. Sixty votes are needed to adopt the motion to waive. If the motion is agreed to, then the substitute amendment will be agreed to and the Senate will vote on final passage of S. 3525.  The Senate is expected then to turn to the Defense authorization bill, S. 3254.

The House is scheduled to return tomorrow at 2:00 p.m.

Politico writes today, “Call them the cliff jumpers. A growing bloc of emboldened liberals say they’re not afraid to watch defense spending get gouged and taxes go up on every American if a budget deal doesn’t satisfy their priorities. . . . If tax rates snap back to the higher levels from the 1990s and painful budget cuts start to hit the Pentagon, these Democrats — led by Washington Sen. Patty Murray — believe they would wield more leverage over the GOP to enact a budget compromise on their terms.”

Politico notes, “Murray declared in a speech this summer that she would push budget negotiations into 2013 if Republicans don’t cave on taxes for the rich. The fourth-ranking Senate Democrat repeated the threat in a Nov. 11 interview on ‘This Week.’ ‘If the Republicans will not agree with that, we will reach a point at the end of this year where all the tax cuts expire, and we’ll start over next year,’ Murray said.”

Now some House Democrats are echoing Murray. If he doesn’t get the tax increases he wants, Rep. Peter DeFazio (D-OR) told Politico, “then we’re better off going over the cliff and readdressing this with a better Congress in January.” Rep. Peter Welch (D-VT) said, “If it’s necessary to wait [past January 1^st] to get a good deal, let’s do that.”

With such talk coming from Democrats in Congress, left-wing groups “are preparing a multi-million campaign” to pressure Congress and President Obama to simply allow the country to go over the fiscal cliff if they don’t get the tax increases they’re demanding.

“But that tough stance has led Republicans to claim Democrats are all too eager to trigger a recession,” Politico points out. “With a poster of a scene from the 1991 film ‘Thelma and Louise’ behind him, Utah Sen. Orrin Hatch said in a floor speech this summer that — much like the movie’s title characters — Democrats were planning to drive the economy straight over the edge to get tax increases. ‘Rather than stop the country from going over the fiscal cliff and preventing the expiration of the 2001 and 2003 tax relief, they are prepared to Thelma and Louise the American economy right over the cliff,’ said Hatch, the top Republican on the Finance Committee. ‘That is an astonishing admission.’”

As Senate Republican Leader Mitch McConnell said, “[T]here are clear obstacles to success. And if we’re going to succeed, if we want to avoid a job-killing tax hike and put the country on the path to solvency, we need to be clear about what those obstacles are. The first obstacle is a very vocal and very determined group of extremists on the Left who are rooting for us to go off the fiscal cliff. These are the folks the President invited to the White House earlier this [month], and who seem to have gotten a number of Democrats in the Senate to embrace this reckless idea themselves.

“Make no mistake: the goal of these folks isn’t to do what’s best for the middle-class. It isn’t to create jobs. It isn’t even to balance the books, since the taxes they’d hike wouldn’t even come close to covering current spending. What they want is to sock it to those they define as rich, regardless of the impact on jobs or the broader economy. That’s what motivates this crowd. They’re not serious about tackling the nation’s fiscal problems. And if we’re serious about helping middle-class Americans and helping this economy grow, their radical approach should be ignored.”

To Summarize the above and provide additional news stories:
SEN. MITCH McCONNELL (R-KY): “It’s time for the President to present a plan that rises above these reckless and radical voices on the hard Left, that goes beyond the talking points of the campaign trail, and that has a realistic chance of passing the Congress. The time for campaigning is over. It’s time for the President to lead.” (Sen. Mitch McConnell, Prepared Remarks, 11/26/12)

‘Emboldened Liberals’ Eye ‘More Leverage’

“A growing bloc of emboldened liberals say they’re not afraid to watch defense spending get gouged and taxes go up on every American if a budget deal doesn’t satisfy their priorities.” (“Fiscal Cliff: Will They Jump?” Politico, 11/25/12)

“…If tax rates snap back to the higher levels from the 1990s and painful budget cuts start to hit the Pentagon, these Democrats — led by Washington Sen. Patty Murray — believe they would wield more leverage over the GOP...” (“Fiscal Cliff: Will They Jump?” Politico, 11/25/12)

• “Murray, colleagues agree, doesn’t issue idle threats. ‘Everyone takes Senator Murray seriously because she does not bluster,’ Reid said. ‘She simply says what she means and stands by it.’” (“Patty Murray Likely To Be A Key Voice In Senate On Budget Deal,” Washington Post, 11/23/12)

Some Senior Dems Comfortable With That Outcome

“… senior Democrats say they are prepared to weather a fiscal event that could plunge the nation back into recession...” (“Democrats Threaten To Go Over ‘Fiscal Cliff’ If GOP Fails To Raise Taxes,” The Washington Post, 7/15/12)

“…Democratic Senator Patty Murray said her party is willing to risk racing over the fiscal cliff and into financial chaos in 2013.” (“US Lawmakers Head Home, Severe Challenges Loom,” AFP, 8/4/12)

“Sen. Patty Murray, D-Wash., who outlined the Democratic strategy … that her party would rather plunge off the fiscal cliff than extend tax cuts for the wealthiest Americans. White House aides pointedly backed Murray's threat...” (“Democrats Waxing Tough On Fiscal Cliff,” National Journal, 7/25/12)

• SEN. PATTY MURRAY (D-WA): “…our country is going to have to face the consequences…” (Sen. Murray, Remarks At The Brookings Institute, 7/16/12)

CBO Projects ‘Significant Recession,’ ‘Jobless Rate Rising’

NATIONAL JOURNAL: “CBO: Jumping Off Fiscal Cliff Would Cause Recession” (“CBO: Cliff Would Cause Recession,” National Journal, 8/22/12)

NEW YORK TIMES: “…if Congress takes no action to stave off tax increases due and automatic budget cuts scheduled to take effect on Jan. 1, the economy could fall into a recession, with total output shrinking and the jobless rate rising to about 9 percent in the second half of 2013… Fears about tax increases and spending cuts — the ‘fiscal tightening’ — are depressing economic growth…” (“Report Sees Risk Of Recession If Budget Stalemate Persists,” The New York Times, 8/22/12)

WASHINGTON POST: “The nation would be plunged into a significant recession during the first half of next year if Congress fails to avert nearly $500 billion in tax hikes and spending cuts set to hit in January…” (“Significant Recession Imminent If Congress Doesn’t Act On Fiscal Cliff: CBO Report,” The Washington Post, 8/22/12)

REUTERS: “…even worse economic damage than previously thought if Washington fails to come up with a solution, Congress' budget referee said on Wednesday.” (“U.S. CBO Sees Deeper ‘Fiscal Cliff’ Recession Next Year,” Reuters, 8/22/12)

AP: “… fresh, dire projections by the nonpartisan Congressional Budget Office.” (“Analysts: Recession Likely Without Budget Accord,” AP, 8/22/12)

CBO: “…a recession, with real GDP declining by 0.5 percent between the fourth quarter of 2012 and the fourth quarter of 2013 and the unemployment rate rising to about 9 percent in the second half of calendar year 2013.” (“An Update To The Budget And Economic Outlook: Fiscal Years 2012 To 2022, Congressional Budget Office, 8/22/12)

STUDY: ‘710,000 fewer jobs’ “This report finds that these higher marginal tax rates result in a smaller economy, fewer jobs, less investment, and lower wages. … Employment in the long-run would fall by 0.5% or, roughly 710,000 fewer jobs, in today’s economy.” (“Long-Run Macroeconomic Impact Of Increasing Tax Rates On High-Income Taxpayers In 2013,” Ernst & Young LLP, 7/12)

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