OBAMA MUST NOT CAVE AGAIN

THE DEBT ISSUE

There is a debt crisis. How to resolve it was the core issue of the recent election. Obama maintained that the rich had to pay a “little more” to move to balance the budget. Anyone earning less than $250,000 would not have his or her taxes increased. Those earning more than $250,000 would have their marginal rates increased from 35% to 39%.  (It has been shown that this small move would go along way to set the budget on a positive trajectory). Romney maintained that the there should be reductions in discretionary spending i.e. Medicare, Medicaid and food stamps and the like. The rich were the job providers and if they paid higher taxes fewer jobs would be created. Also reduce the amount of deductions, "loopholes" people could take utilize to reduce their taxes was a recurrent refrain of Romney.

The electorate spoke and they backed Obama. Opinion polls now show that two thirds of the population believes that is where the main source of the revenue should come from. – Raising taxes of the rich.

The urgency is that if the issue is not resolved by January the taxes of all will be raised. As things stands at the moment you might believe that the Republicans won the election. Brazenly they are calling for entitlement reduction and "loophole" closing rather than carrying out the election mandate. The Obama administration instead of telling the Republicans the facts of life appear to be buying into this hype.

REPUBLICAN RESPONSE

There are a few Republicans that have recognized that they may have to raise revenues but they are full of ifs and buts. Eric Cantor, the Republican House Leader for example, on Morning Joe was full of conciliatory talk but did not really know how raising the marginal rate would help increase employment. Grover Norquist, who elicited pledges from Republican legislators not to raise taxes, is threatening these miscreants. But for practical purposes the Republicans are holding the line.

 The principle Republican compromise to obtain revenue is for income tax deductions, “loopholes”, to be reduced and therefore more revenues will accrue because everyone will in the end have to pay more taxes. Their principle thrust for debt reduction however is to reduce "Entitlement Spending".

When the Republicans offer to close “loopholes” what do they mean?  Do they mean not to allow mortgage interests to be deducted, excess medical expenses, childcare…? Do they mean donations to charities and institutions must be taxed at the full rate? That is really kicking the can own the road. Food pantries, homeless shelters, Planned Parenthood, the Salvation Army, the Mormon Church, not for profit medical institutions, the museums etc etc will see a massive drop in funds. This together with their suggested entitlement cuts will just worsen an already intolerable situation.  

Nowhere has one heard that the 15% “loophole” for Capital Gains earnings or the “loophole” in tax one gets for investing in foreign havens, for example” should be closed.

So far there has been no real compromise from the Republicans on the basis that the election was fought on. - Just confusing and misleading rhetoric.

REPUBLICAN PARTY MESS

The Republicans still cannot come to terms that twice in a row the electorate chose an African American over their establishment candidates. As Bill O’Reilly of Fox news has said this is no longer a white man’s country.

The Republican Party is in a mess without a coherent message.  They have to find their own salvation. The onus is not on the Democrats to prop up this disparate group of no hopers. If the Republicans do not accept the results of this election and do not support a debt reduction plan that is reflective of the electoral will, they should be made to face the consequences. If they don’t make appropriate compromises the Democrats and Obama should stick to their guns and usher the Republicans into the dark ages. They will be totally crushed in the 2014, midterm, elections.

The trouble with the Republican Party is that unelected megalomaniacs like Karl Rove, Grover Norquist, Donald Trump or Rush Limbaugh or minority interests run them. These are the spokespersons of the Party and create the Party platform. Then when Republican candidates are confronted by the lunacy that these bright stars have articulated and enshrined in Party Policy they run away from them.

Grover Norquist holds the party and the country to ransom. With his quaint ideas that there should be no raising of taxes. This concept he interprets broadly to include taking away an oil company subsidy because this would be a tax raise! If the Republicans are prepared to put up with this patent nonsense, the country led by the Democrats should not. You cannot compromise with these people because they don’t believe in compromise. Win, lose or draw it is the same.

ENTITLEMENTS

Then there were the issues of Medicare, Medicaid and Social Security that were central to Obama's platform. They were also central to the Ryan Plan and the Republicans. These social programs would be totally altered in the Ryan plan and revenues would be saved. So much so were these issues part of the Obama agenda that there are already adverts on TV from the American Retirement Association exhorting that these be retained. So any compromise on these programs has to be "reasonable" and Obama has not that much room to manouvre. Again he should not loose to much sleep because this was a central election issue.


OBAMA SHOULD NOT CAVE

Obama should stand firm once and for all. If it means that everyone’s taxes be raised let it happen. Everyone knows who will have caused this and let the Republicans run on it in the midterm elections. Obama should have got over his need to be accepted by the Republicans. It is not going to happen.  The only thing that they are happy about is that he cannot run for a third term

Obama should get on the road once again and explain the issues. Tell the country if they go along with the Republican concepts the situation would worsen. That if an appropriate solution is not found then it is worth our while to grit our teeth and wait 2 more years and finish the job off by throwing these arrogant legislators out.

This is against Obama’s natural instincts. He has also articulated his fear of overreach that has marred so many Presidents’ second terms. But this is not overreach he ran on this issue.

Should Obama stand firm it will have the added benefit of really making the Republican Party rethink their platform in the third millennium. This will be to everyone’s advantage because the last thing any country needs is a one Party State.

Obama’s truest test of leadership and character has come. He will mortify his supporters if he caves like he did in 2011.