Did Grover Norquist Win the Fiscal Cliff Showdown?

The Left is worried: This is a good sign

by KEN BRAUN and KATHY HOEKSTRA

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The eventual victors of intense political disputes are not always as they first appear. The just- concluded “Fiscal Cliff” showdown may be no exception. As the smoke clears from such a big fight, there’s always clues as to what the next battle will be, but they’re not often looked at in real time. This is a mistake.

Consider: The last time U..S. Sen. Dianne Feinstein decided to grandstand about gun control, she comically and unsafely mishandled a rifle by improperly jamming her finger through the trigger during a photo-op. She still succeeded in getting the 1994 gun control measure passed. But her victory was a major factor leading to the Republican Revolution in the 1994 mid-term election, just two months after the law was signed.

Likewise, the Monica Lewinsky Scandal broke in January of 1998, yet President Clinton’s Democrats gained seats during the mid-term election ten months later, while the Republicans plotted his impeachment.

In both cases, the people who initially celebrated their good fortune did not pay enough attention to warning signs from inside their own camp. As conservatives lament what they believe is a Republican defeat at the Fiscal Cliff, the worries from the Left point to potentially real opportunities for Republicans who want to reform spending.

The President’s big advantage in the Fiscal Cliff negotiations was automatic tax hikes on the so-called wealthy that were so severe that Republicans could not stomach them. They had to have a deal. With that weapon in hand, the Left expected the President to get a deal that would protect government spending to their satisfaction - saving the welfare state and entitlement spending with few changes.

Instead, the President allowed Republicans to agree to less severe tax hikes on the wealthy, but kicked all the big spending battles down the road a few more months. The tax fight is resolved, the spending fight isn’t, and we still don’t have enough money to fund all the government that the progressives want to save.

What remains is automatic budget reductions from the sequester, another debt ceiling battle, and more budgets for future years. What the Left now fears is that the President has given away his leverage before the game is finished.

Major entitlement and welfare state reforms are exactly what Republicans have been demanding since the Fiscal Cliff deal was finalized. If the President cuts a deal with them, then this is the sort of thing that may win him a well deserved place in history as a reformer. (Think Bill Clinton and welfare reform.) If you read closely, those on the progressive Left are noticing all this and they’re getting worried that the President will sell them out.

The Center on Budget and Policy Priorities, a liberal think tank, notes that 82 percent of the Bush tax cuts have now been made “permanent,” including “all of the income, capital gains, and dividends tax cuts first enacted under President Bush” and keeping the “estate tax at the levels that it was at in 2012.” The New York Times quotes a CBPP budget expert as being very anxious about the fight yet to come: “I now fear that we are heading toward a crisis that can dwarf what we’ve just been through.”

Speaking of the New York times: The instant reaction to the Fiscal Cliff deal from America’s most famous knee-jerk liberal, Paul Krugman, was to refer to President Obama as “the world’s worst poker player.” In another of several blog posts on the subject, he laments about the President: “He may say that he absolutely, positively won’t negotiate over the [debt] ceiling — but nothing in his past behavior makes that believable.”

One of the New Republic’s house progressives, Noam Scheiber, echos Krugman’s concerns, but with more angst: “I want to believe the president can get through the next stage in this endless budget stalemate without accepting some of the more dangerous spending cuts conservatives are demanding. But at this point I’m having a hard time seeing it.”

"Taken en masse, the three remaining cliffs—with much of the revenue side of the equation already handled in the deal (Tuesday) night—could be disastrous for Democrats,” writes a reporter for the Nation, America’s biggest progressive magazine. “It’s why Harry Reid told the White House he hated the deal, and even threw one version of it into the fireplace.”

The Nation column also quotes a statement by progressive Democrat Rep. Jim Moran of Virginia: “... the problem is, we have set up three more fiscal cliffs. We‘re gonna have to deal with the debt ceiling, we’re gonna have to deal with the continuing resolution expiration, and we’re gonna have to deal with the sequester. And all that’s left is spending cuts. And all that’s left to ask ourselves is, what programs do we cut and how deep do we cut them? We have to look back on this night and regret it.”

The looming sequester cuts are also getting noticed by federal employee unions. And the President’s Big Labor friends are not happy.

Federal News Radio 1500AM quotes the head of the National Federation of Federal Employees: "The most important federal workforce issue of our generation - sequestration - continues to hang over the head of federal employees throughout government.” The same labor boss called it a “bad deal.”

The radio station also reports that sequestration cuts would snip $85 billion from the 2013 budget. That would break down as a just a 7.3 percent reduction from defense spending and a 6.5 percent trimming of non-defense departments. If Congressional Republicans can unite around a willingness to accept these cuts, despite the defense reductions, the President has few bargaining points to hold over them. If he wants a debt ceiling extension, he needs to offer something; when he needs a future year budget deal, he needs to offer something.

The American voters now know that Republicans gave the President his tax hikes. If he demands more tax hikes, then Republicans can plausibly make him out to be unreasonable. The President’s most serious progressive allies on the Left know this very scenario is possible and they are very worried that his next giveaway is going to be major (and long overdue) entitlement reforms to the welfare state.

One of the surprises in the run-up to the Fiscal Cliff deal was Grover Norquist of Americans for Tax Reform announcing that voting for the deal would not be a violation of his now intergalactically famous Taxpayer Protection Pledge. The reasoning was straightforward: After the calendar turned to Jan. 1, ALL of the Bush tax cuts expired, so the Fiscal Cliff deal was  actually a REDUCTION in taxes from the automatic tax hikes that would otherwise take place on that day.

The deal that was offered may yet put Republicans in the driver seat and be the big event that history will remember.

ATR’s statement regarding the Fiscal Cliff deal sums up the worst fears of progressives very well: “Over the next 90 days, Congress will have three opportunities to cut spending: during debate regarding the sequester, the continuing resolution, and the debt ceiling.  These are all opportunities to extract real spending cuts and entitlement reforms out of Washington.  The U.S. House won’t be voting for any tax hikes, since (as Chairman Camp put it), the revenue level is now settled.”

Mr. Norquist was often portrayed as “Villain #1” in the Fiscal Cliff drama. If Republicans really don’t go back to the tax-raising table, history may yet proclaim him one of its victors.

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Mr. BRAUN is the Policy Director for Job Creators Solutions and Ms. HOEKSTRA is the Media Director.

Permission to reprint this item is granted, provided that Job Creators Solutions and the authors are cited properly.

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