It's the Budget, Stupid

In Butch Cassidy and the Sundance Kid, the antiheroes are cornered by the Pinkertons on a sheer cliff looming hundreds of feet over a white water river. Sundance (Robert Redford) is paralyzed with fear at jumping off, finally admitting "I can't swim!" Butch (Paul Newman) hoots his reply, "Are you crazy? The fall will probably kill you!" And so we come to the fiscal cliff. As one of the 2%, this taxpayer will pay lots more if the Bush tax cuts go off the cliff. It's a horrible result, worse even than the President's demand to soak the top two brackets.

The President has neatly crafted the standoff as the Republicans "holding the middle class hostage" to tax cuts for "the rich." The first part may be right, though more than a little hyperbolic, but the latter is not. Predictably the Republicans have not explained why they are taking hostages: denying higher taxes on anyone is crucial when there is no other way to guide and control spending by the Executive Branch of government. The problem underlying the present standoff is simply this: there is no budget. The reason there is no budget is that the President will not propose one that anyone in his own party will vote for, and the Democrat-controlled Senate will not bring its own version up for a vote. Majority Leader Reid's pious mewling notwithstanding, the reticence of his party cannot be excused by its prediction the House will not like a budget that can pass the Senate. There is an effective two hundred year old process for dealing with disagreements of this type, and no part of it requires more than a majority vote of each chamber and the President's signature. Nor is it honest for the Majority Leader to claim the effort will be futile because the Senate Republicans will filibuster. The nation learned with the Affordable Care Act that finance bills do not require a super-majority. The House is thus left in the untenable position of arguing for cuts in a spending plan that does not exist. This rudderless condition has persisted, deliberately and knowingly, for over three years, notwithstanding a statute requiring annual budgets from Congress. It first reached crisis proportions with the 2011 increase in the debt limit. The Democrats quite properly argued that there was no precedent to block borrowing for anticipated expenditures, but the fact is there was no precedent for approving a higher debt limit in an unbudgeted world. Opposing the debt increase was the only vehicle for tying taxing to spending. Back in the day, this inaction would be self-correcting by the very real threat of a government shutdown. The government could not operate without appropriations, and appropriations were (logically) tied to spending needs, which are the guts of a budget. Each chamber of Congress was forced to pass a budget the minority party, and possibly the other chamber, disliked in order to avoid a shut down. The competing bills then went to a joint committee to be "reconciled"; after a little sausage-making, a compromise bill would be put up to the Senate and the House for a vote, without amendment, on a simple majority basis. If the process did not work, the government would go off the cliff of a shut-down. The process became unhinged in recent decades because of delays in the budget process. These were increasingly papered over by "continuing resolutions" to keep the government running on the old budget (plus "baseline increases") while the new one was being birthed. As is often the case, experiments spawned by laziness grow into corrupt practices. In the process of continuing resolutions, someone came to the realization that, if the government can live on temporarily without a budget, it can live on forever without one. The chambers realized they can come to agreement on the easy stuff -- spending bills -- by back-scratching and can simply ignore any connection to the "ways and means" to pay for the outlays. The idea of a budget, of course, is that there is a revenue side and a spending side. If the two sides are out of whack, the gap has to be filled by taxing more, spending less, or borrowing money. A budget becomes a very inconvenient obstacle to getting re-elected. The present process is like a poker game in which everyone is playing with the casino's money. One side offers up tax cuts (or spending) for its people and the other matches with tax cuts (or spending) for its folks. Everyone walks away with winnings, and the casino is left holding worthless markers. As a rule, this makes Congressmen and Senators very happy. To paraphrase The Treasure of the Sierra Madre, "We don't need no stinkin' budgets!" The Congress now finds itself in the ludicrous position of levying taxes that have no relationship to what the taxes are being raised for. The President is right about two things. He is right that the typical purpose for demanding new tax revenue (reducing the deficit) is in fact irrelevant. Washington could be wading in the proverbial "surpluses as far as the eye can see," and he would insist on them. He promised his voters he would "ask" the wealthy to pay their "fair share," and he knows that stickin' it to the man is a promise he must keep. The Speaker and talk radio hosts blathering on about "reining in entitlements" must sound to him like the adults in a Peanuts cartoon. The President is also right that whoever brings up spending will be tarred with the Scrooge brush and that the Republicans know this lesson full well. Republicans that cling to the notion that the burden to cut spending is on the President -- or surely will be if only the Republicans hand over the rich on a spit -- ought to catch up on their Road Runner cartoons. That trap won't spring. The President has neither the intention nor the desire nor the motivation to even suggest spending cuts, unless they involve military outlays in red states. Republicans do not seem to grasp that this bit of street theater over the Fiscal Cliff isn't a conspiracy; it's a strategy. Thus far the President won votes with promises his voters have not had to pay for. His present choices are (1) break the promises, (2) send them a bill, or (3) do neither. The last option seems irresponsible to Republicans, and back in the day was unthinkable to Bill Clinton. But that is not the case with this generation of Democrats. They know the Republicans will clean up as best they can after their party, hopefully before Mom and Dad get back from the mountains. The only people that will be able to pay the bills -- now or in the future -- are the upper middle class and the military-industrial complex. No big deal -- and indeed a positive, redistributive good. It is probably too late to avoid either capitulating or going off the cliff. In either event, the Republicans nevertheless need to get refocused on a core strategy: do not increase spending or taxes unless there is an approved budget providing for it. The message is simple, and goes to the heart of the Democrats' undeniable refusal to exercise fiscal prudence: No budget, no money. Imagine the talking points. There they go again. These are the same old "tax-and-spend" Democrats. We will pass a bill to renew the entire existing tax structure. If it dies or gets vetoed, and we go over the cliff, it's on the Democrats' head. We will pass a budget, with or without revenue enhancements, and send it to the Senate. This is not an ultimatum. The Senate can vote these measures down, and refuse to engage in reconciliation of the budget. The President can veto either measure. But until there is a budget passed through normal legislative processes by the Congress, and signed by the President, we will not consider increases in taxes or the national debt limit. We will not shut down the government. We will vote for continuing resolutions, but not above the levels of actual 2011 outlays unless there is an approved budget. If the President feels there is an impasse coming because we insist on "regular order," we will pressure his Administration to begin planning cut backs and present his choices to the American people. In 2011, President Obama made dire predictions about a revenue shortfall but managed to insinuate Congress was their author: cutting student loans, "taking police off the streets," hamstringing the anti-terror efforts of the FBI, abandoning handicapped children, and slashing Medicare and Social Security. Republicans must make the case that responsible leadership is inconsistent with such cruel fear-mongering, pointing out other places to cut. He is the CEO of this country, and he must be held responsible for his choices. In the course of taking a budget-based stand, the Republicans may very well get whacked, but the Democrats will not be able to evade their complicity in the problem. People understand budgets. There is never a pleasant time to end an addiction. As Lloyd Bridges lamented in Airplane, "Looks like I picked the wrong week to stop sniffing glue." But all the experts agree that there will be no easier time to get sober after today.