Friday, December 07, 2012

Debt Limit Redux

A lot of media bandwidth right now is being taken up by the so-called fiscal cliff, with the Obama Admin and Congressional Republicans in a game of brinksmanship over the expiration of the Bush tax cuts at the beginning of the year. The truth is that a lot of this talk is just being used to generate dissonance in viewers. At this stage, based on who has the leverage and the mechanism of the tax cuts' expiration, the onus is almost entirely on the Republicans to lose the argument gracefully -- in other words, whether they'll quietly pass a tax cut for the middle class and let rates rise on the top 2% of earners, or whether they'll put up a huge stink and still pass a tax cut for the middle class and let rates rise on the top 2% of earners. Either way, inevitability.

The real question mark, however, is hovering over impending negotiations with John Boehner as to whether House Repubs will raise the debt limit -- a formality under all previous administrations -- or if they'll play another game of economic chicken like two summers ago (when they first realized they could get their way by threatening to shoot the hostage). Back then, President Obama made concessions big and small to make a deal happen, and watched the United States' credit rating get downgraded anyway. This time, per the Prez, he's not negotiating. No way, no how. It's a pretty firm line in the sand, but let's see what happens moving forward. In the meantime, Josh Marshall at Talking Points Memo has a pretty good layout of what the stakes are in this fight, and why it's pretty important to pay attention to.

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