Push Back the Fiscal Cliff

With the Republicans in a state of confusion, I think Obama should attempt to push the Fiscal Cliff back a year or two. This strategy isn't being discussed much, but I think it would lead to a good outcome for Democrats in both the short and long term.

First, Democrats should have a long-term goal of returning all taxes to Clinton-era levels. Funding government programs that liberals favor requires this amount of revenue. Pushing back the fiscal cliff preserves the option for Obama to unilaterally return tax rates to those levels in a few years. At the point the economy will likely be stronger and hopefully the market trusts the new, more aggressive, federal reserve to sustain nominal spending in the face of a tax increase.

Second, the sequester mechanism makes no sense at any point. But the spending cuts less devastating in a year or two, for the reasons stated above.

I know Obama promised to raise taxes on the rich, but one or two years of additional revenue from those making over 250,000 isn't that helpful to the U.S.'s fiscal position. The Republicans will probably claim it as a political victory--taxes didn't go up on the rich--but it will be a substantive victory for Democrats. Obama will have achieved both his short term goal (avoid the fiscal cliff) and will have paved the way for what should be the Democrats long term goal (clinton-era revenue levels). The current aim of permanently extending tax cuts for those making under 250,000, while letting tax cuts expires for those above that amount, prioritizes the political over the substantive, and makes future cuts to government programs more likely.

Hindsight is 20/20, but I think liberals should have used the attention being paid to income inequality as an argument for shoring up and expanding government programs, not as a call to tax the rich.