It’s becoming conventional wisdom that the president “won” on the fiscal cliff (if you can call half his original revenue request a win) because doing nothing – Congress’s preferred response to any crisis – would have led to automatic tax increases as the lower Bush rates expired. By contrast, Obama “lost” on the sequester because leverage had shifted to the GOP; the default was spending cuts, not tax increases, and what Republican doesn’t love a spending cut? Obama severely overestimated the GOP’s desire to protect the Pentagon and just as radically underestimated its single-minded pursuit of smaller government. (The sequester didn’t touch entitlements, and thus did little to solve the debt “crisis,” but as Paul Krugman constantly reminds us, Republicans today don’t care about deficits. They care about lower taxes.) If you accept this version of history, Obama is in a bad position. The GOP has him over a barrel; inaction on the sequester gave conservatives their spending cuts, and they have little incentive to negotiate a deal on entitlements with a president unwilling to solve the problem solely through further cuts. Many Democrats feel that he should have pushed for more revenue prior to the fiscal cliff, even at the risk of letting tax rates go up on the middle class. “Thinking they’d have a second bite of the apple was a real mistake,” former CBO director Robert D. Reischauer told the New York Times. (The Times also notes, however, that other Democrats like Nancy Pelosi weren’t helping the administration’s bargaining stance by floating proposals to raise even less revenue by limiting tax increases to income over $1 million.)
At Washington Monthly, Ed Kilgore points to a possible silver lining in the president’s miscalculation. According to an article by David Kamin in the magazine’s March-April issue, inaction may once again save us. Just as doing nothing to forestall the fiscal cliff would have led to a massive influx in revenue that even the president acknowledged would hurt the economy, doing nothing to index tax brackets for inflation will also lead to greater revenues. Staying the course on the Affordable Care Act will do the same. Kilgore summarizes:
[T]here are two other ways in which revenues may well automatically increase in coming years if “nothing happens” to break the current partisan gridlock in D.C. One is the natural “bracket creep” that will be exacerbated if income equality continues to grow. The other is Obamacare’s tax on “Cadillac” health care plans, which will gradually act to reduce the tax subsidy on employer-based health insurance. Combine these two ingredients of current law and slowly simmer them over time, and you’ve got some serious deficit reduction.
He also quotes directly from Kamin’s piece, which is worth reading in full:
Taken together, this “automatic” revenue growth would reduce the long-term deficit, as projected by the CBO, by roughly one-third over the next seventy-five years. Again, that’s with no congressional action whatsoever. Moreover, it’s based on what’s probably too pessimistic a scenario that, among other things, assumes no ramp-down in the wars abroad, a return to higher historical levels of both defense and nondefense annual appropriations, and a partial repeal of Obamacare’s controls on health spending.
Of course, the downside here is that, as desirable as new revenues may be, achieving them in this manner relies on the continuing dysfunction of Congress – which isn’t exactly a plus for the country as a whole. The extent to which policy has been driven over the past year by politicians’ sheer refusal to act – to cast courageous votes that might earn them a primary challenge, to choose compromise over ideology – is amazing. Even the sequester – $1.2 trillion in cuts designed to be so repulsive to both sides that the “supercommittee” would be forced to come to an agreement – wasn’t enough to cure the Republican allergy to tax increases or convince the president to replace his “balanced” offer with a complete cave.
While it’s nice that Washington Monthly can find a bright side to the gridlock, and to know that the next time Congress can’t get it’s act together, the default path will favor Democrats and not Republicans, it’s also profoundly depressing. Just as the sequester-related cancellation of White House tours has taught groups of disappointed schoolchildren more about the realities of government — that it’s less the paragon of democracy envisioned by the Founders and more an institution led by very human, frequently bickering adults — than they ever would have learned in a stroll through the East Room, the sequester has taught the left something important about the merits of even small, dubiously secured achievements. Conservatives have openly rooted for gridlock for years out of the belief that the government which governs least governs best. To many Republican thinkers, more bills being passed by Congress simply means more regulations and greater federal power. Dysfunction throws a wrench in the gears of the leviathan state that they would rather see grind to a halt in the first place. Democrats, who generally favor a more activist government, are the ones who benefit from a functioning Congress able to pass bills and fund programs. For liberals, there is something almost distasteful in looking for a silver lining in the brokenness of our political system; we tend to see government as good, and thus want it to work well. Kamin’s insight suggests that perhaps that distaste can be overcome. We too can learn to love gridlock. Less certain, however, is whether we should.







