Think of the fiscal cliff deal as built almost exclusively on how much revenue the government will collect. The truly vexing problem – but also a tremendous opportunity to begin leveling the feds’ more dangerous Debt Mountain – is deciding how much the government will spend. Three concurrent issues offer the possibility of a megadeal:
The Obama administration urgently wants to raise the borrowing limit of $16.394 trillion that the government hit Monday. In this coming battle, though, Democrats no longer will have the tremendous leverage they’ve enjoyed: the now-obsolete threat of the Jan. 1 fiscal cliff, with its income tax hikes on all Americans.
Note that Democrats led passage – which makes almost all of the Bush-era income tax cuts permanent. The nonpartisan Tax Policy Center said that this bill will raise almost all of its new income tax revenue from 0.7 percent of U.S. households. If you’re in the other 99.3 percent, your Bush tax cuts no longer are “temporary.”
The president will get $620 billion in new revenue over 10 years, not the $1.6 trillion he wanted. Which is why congressional liberals were upset Tuesday: Without being asked, House Speaker John Boehner had offered $800 billion in new revenue. Conservatives, similarly upset, fumed Tuesday that the cliff deal raises roughly $40 in revenue for every $1 in spending reductions.
Expect more denial of the need to cut spending. And keep telling yourself: “I, um, enjoyed watching stubborn politicians tussle at the fiscal cliff. I’ll bet I really love the Battle of Debt Mountain.”