Here is the biggest problem with the news coverage of the Fiscal Cliff. The only message coming through was President Obama's message: that he was trying to save the middle class from a tax increase by raising taxes on the rich. On the Republican side, the message was…well…it was a muddled mess.
Republicans seem to have great difficulty reminding people that the George W. Bush tax cuts are the reason middle income families have not been paying about $2,000 more in taxes every year. The agreement President Obama just made with Congress saves about 80% of those tax cuts. It saves them for everybody earning less than $400,000 and makes them permanent. As of January 1, those tax cuts were swept off the table. So in voting to restore them for 98% of the population, Congress did not vote for a tax increase on the rich. It voted for a huge tax reduction for everyone else.
Anti-tax activist Grover Norquist is right about how to frame the issue: This was not a victory for the president or for the Democrats in Congress. Remember, almost all of them opposed the Bush tax cuts; they campaigned against them in every election; and they blamed them for the huge deficits we have been incurring.
It would be an incredible PR coup for the Democrats if they now appear to be the champions of the very tax cuts they opposed all these many years. If there is one thing about the Republican brand that was never in doubt it was that the GOP is the party of low taxes — for everybody. They have jeopardized that brand in the debris left over from the fall off the cliff.
Republicans also did a poor job of responding to the president's claims that he only wants to restore Clinton era tax rates for investors and business owners. Not true. The new rate on small business (pass through) profits will be 43.4%, not the Clinton era 39.6%. That extra 3.8% is courtesy of ObamaCare.
Which brings us to the greatest Republican failing: allowing the entire Fiscal Cliff discussion to take place without ever mentioning the new taxes we all will be paying because of health reform. Overall, ObamaCare introduces 20 new taxes or tax rates, amounting to about $1 trillion over the next 10 years. Five of the new taxes, amounting to more than a quarter of a trillion dollars, started on January 1, 2013!
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