Out here on the West Coast each New Year’s Eve is a bit surreal – on CNN you can watch the ball drop in Times Square at nine in the evening, or you can wait to watch that at midnight, on tape-delay on the other networks, or you can do both and have two New Year’s celebrations. Or you can do neither. It really doesn’t matter. The whole thing is about no more than an arbitrary moment that, by collective agreement, we’ve all decided marks the definitive end of something and the start of something else, wholly new. It’s a bit silly, but it must satisfy some atavistic need we all have to believe that life makes sense, that it forms some sort of narrative with neat and clean chapters that lead to something – a grand denouement where things, whatever they are, are finally settled, or at least where progress is made. You can’t have progress without any mile-markers after all. You would really never know whether you moved down the road. Still you wake up the next morning, on the first day of the New Year, the same person in the same room (maybe) – and in the same sorry body with the same troublesome issues. A page has been turned. A new chapter has begun – but it’s still the same plot with the same damned characters doing the same damned things, including you. It’s not like you wake up in Lisbon with two old women jabbering away at you in Portuguese, but then it’s far better than waking up a cockroach in Prague. Kafka knew all about the dangers of actual, fundamental change. He probably stayed home on New Year’s Eve.
Kafka is not alone. Out here, down the way in Venice, the Atlantic’s Conor Friedersdorf offers this:
On December 31, mediocre restaurants throughout America string absurd velvet ropes outside their doors, inflate black and white balloons as decoration, and charge three times the usual price for the same old fare plus bad champagne. Is it any wonder that our elders, as they grow older and wiser, opt to stay home and turn in before midnight? America’s most iconic New Year’s Eve celebration, the one that captures the attention of the whole country, has massive crowds gathering in New York City’s most garish neighborhood, where they watch a large ball drop as C-list celebrities narrate on TV. The typical NYC dweller can’t be lured to Times Square for dinner on an ordinary evening, so I can’t imagine how pre-New Year’s conversations go for those who attend. “Would you like to stand out in the freezing cold for hours with no place to sit or use the bathroom and drunks pressed against you on all sides?”
Even more bizarre is the fact that Californians watch a tape-delayed rebroadcast of the spectacle as the clock strikes midnight on the West Coast, with whole parties pausing to gather around the television. “Hey, quiet down,” people actually say, “Ryan Seacrest is about to come on!”
We can do better, America.
Yes we can, but we won’t. We need our momentous moments, even if they are tacky and haphazardly chosen, if not entirely random – and this New Year’s Eve we got the perfect confluence of tackiness and putative big change, with the oversexed and brash Kathy Gifford and the now proudly gay Anderson Cooper in Times Square narrating the ball-drop, and in Washington, the Senate, at the last moment, in the hour before midnight, reaching an agreement to keep America from going over that fiscal cliff thing. The one was as arbitrary as the other.
To recap, as part of the deal last year to raise the debt limit, as usual, the agreement was to raise it on the condition that serious discussions about spending cuts and increased revenue would occur later. Republicans agreed that in exchange for refusing the government the means to pay the bills now due, for money already they themselves had appropriated and had been spent long ago, thus crashing the world’s economy forever – their original threat – at the end of this year the Bush tax cuts would be allowed to expire as planned, suddenly raising taxes on everyone, which would be a shock the still-fragile economy hardly needs, and there’d be matching automatic spending cuts that both sides would find appalling, on all the spending on healthcare and social services and education, which would infuriate the Democrats, and on all defense spending too, which would infuriate the Republicans. In short, both sides created a major crisis for everyone out of thin air and they then gave themselves an absolute deadline to solve this cooked-up crisis.
They didn’t have to do this, but they did do this. They set up a New Year’s Eve crisis because they ignored the whole thing, save for a bit of occasional posturing, for an entire year. Everyone knew it would come down to this New Year’s Eve. A page would be turned. A new chapter in our nation’s story would begin. The ball would drop in Times Square, and in Washington, the politicians would finally work out a series of compromises and deliver us from economic disaster, or they would strike their heroic self-righteous poses and let disaster come. Would we go over the cliff? We would get our momentous moment, one way or the other. Kathy and Anderson wouldn’t matter at all.
The ball dropped in Times Square and we got an agreement in Washington:
Furious last-minute negotiations between the White House and the Senate Republican leadership on Monday secured a tentative agreement to allow tax rates to rise on affluent Americans, but not in time for Congress to meet its Dec. 31 deadline for averting automatic tax increases and spending cuts deemed a threat to the economy.
Yes, this was too late. We’re going over that midnight cliff, and the House was not going to consider any deal until Tuesday afternoon, at the very earliest, so that combination of tax increases and spending cuts go into effect in the morning – but if Congress acts quickly and sends the legislation to Obama to be signed into law right away, the damage could still be minimal – and the markets are closed New Year’s Day so there’ll be no crash, right away. Of course the folks in the House, with that Tea Party crew, could force John Boehner to refuse to let the Senate fix-it-all agreement come to the floor for a vote at all, or the House could vote it down, or amend the thing and send it back to the Senate to be rewritten entirely – but no one hopes any of that will happen.
Still it might, as this looks like an Obama win:
Under the agreement, tax rates would jump to 39.6 percent from 35 percent for individual incomes over $400,000 and couples over $450,000, while tax deductions and credits would start phasing out on incomes as low as $250,000, a clear win for President Obama, who campaigned on higher taxes for the wealthy.
“Just last month Republicans in Congress said they would never agree to raise tax rates on the wealthiest Americans,” Mr. Obama said at a hastily arranged news briefing, with middle-income onlookers cheering behind him. “Obviously, the agreement that’s currently being discussed would raise those rates and raise them permanently.”
The Republicans gave in, and this agreement also assures a full year’s extension of long-term unemployment insurance – no strings attached and without offsetting spending cuts. That’ll cost thirty billion, but the prospect of at least two million people suddenly penniless was something the Republicans seemed to want to avoid, for a change. Maybe they’re tired of being the bad guys.
There’s also this:
In one final piece of the puzzle, negotiators agreed to put off $110 billion in across-the-board cuts to military and domestic programs for two months while broader deficit reduction talks continue. Those cuts begin to go into force on Wednesday, and that deadline, too, might be missed before Congress approves the legislation.
That was just buying time, and it does spell trouble:
The nature of the deal ensured that the running war between the White House and Congressional Republicans on spending and taxes would continue at least until the spring. Treasury Secretary Timothy F. Geithner formally notified Congress that the government reached its statutory borrowing limit on New Year’s Eve. Through some creative accounting tricks, the Treasury Department can put off action for perhaps two months, but Congress must act to keep the government from defaulting just when the “pause” on pending cuts is up. Then in late March, a law financing the government expires.
Damn – all three things happen at once – the hold on across-the-board cuts will expire just when the debt-ceiling stuff comes to a head, just as everything authorizing financing the government expires. Obama won this time, but this is small beans compared to the Republicans in the House being about to tell Obama to cave in on all their demands or they’ll not only create worldwide economic collapse, declaring America insolvent, unwilling to pay its bills, they can also shut down the government entirely, just like Newt Gingrich did so long ago. They just traded a few minor items for immense leverage in a month or so, and no one was happy:
Though the tentative deal had a chance of success if put to a vote, it landed with a thud on Capitol Hill. Republicans accused the White House of “moving the goal posts” by demanding still more tax increases to help shut off across-the-board spending cuts beyond the two-month pause. Democrats were incredulous that the president had ultimately agreed to around $600 billion in new tax revenue over 10 years when even Mr. Boehner had promised $800 billion. But the White House said it had also won concessions on unemployment insurance and the inheritance tax among other wins.
Still, Democrats openly worried that if Mr. Obama could not drive a harder bargain when he holds most of the cards, he will give up still more Democratic priorities in the coming weeks, when hard deadlines will raise the prospects of a government default first, then a government shutdown. In both instances, conservative Republicans are more willing to breach the deadlines than in this case, when conservatives cringed at the prospects of huge tax increases.
Still none of this was easy:
Democrats put out late word that Republicans wanted the threshold at which inherited estates would be taxed to be indexed to inflation, a nonstarter for them. Republicans said they needed to see what cuts would pay for the $24 billion needed to put off across-the-board spending cuts. But with Republicans and Democrats grumbling, it was clear that a deal hashed out through intense talks between Mr. Biden and Senator Mitch McConnell of Kentucky, the Republican leader, had given both sides provisions to cheer and to jeer.
Under the deal, tax rates on dividends and capital gains would also rise, to 20 percent from 15 percent, on income over $400,000 for single people and $450,000 for couples. The deal would reinstate provisions to tax law, ended by the Bush tax cuts of 2001 that phase out personal exemptions and deductions for the affluent. Those phase-outs, under the agreement, would begin at $250,000 for single people and $300,000 for couples.
The estate tax would also rise, but considerably less than Democrats had wanted. The value of estates over $5 million would be taxed at 40 percent, up from 35 percent. Democrats had wanted a 45 percent rate on inheritances over $3.5 million.
Under the deal, the new rates on income, investment and inheritances would be permanent, as would a provision to stop the alternative minimum tax from hitting middle-class families.
It’s all very complicated, but it’s done – or it isn’t. The folks in the House could blow it up completely, and consider this post from Noam Scheiber at the New Republic:
I think a reasonable person can defend the bill on its own terms. The fact is that nudging up the tax threshold to $450,000 only sacrifices $100-200 billion in revenue over the next decade (against the $700-800 billion the administration would have secured with its original threshold), while allowing unemployment benefits to lapse would cause real pain to both the 2 million people directly affected and, indirectly, to the economy. Yes, Obama could have gotten the latter without giving up the former had he just waited another few days at which point what the GOP considers a tax increase suddenly becomes a tax cut. But these things are always easier to pull the trigger on when you, er, don’t actually have to pull the trigger. I can’t begrudge Obama his wanting to avoid some downside risk for only a marginally better deal.
My far bigger gripe with the whole fiscal-cliff exercise has always been the strategic dimension – how it affects the next showdown with the GOP, and the one after that. Coming into the negotiation, Obama had two big problems: First, no matter how tough he talked, Republicans always assumed he’d blink in the end, for the simple reason that he pretty much always had. … Second, despite the results of the most recent election, in which Obama won a fairly commanding victory on a platform of raising taxes on wealthy people, the GOP continued to believe that public opinion was mostly on its side. House Republicans cited the preservation of their majority – never mind that their own candidates received fewer total votes than House Democratic candidates – and polls showing most Americans still think government is too big.
Obama is now feeding their delusions, just when the fiscal cliff had offered him a chance to solve both these problems:
He could afford to be unyielding because the economic consequences of going over the cliff for a few days or weeks would be relatively minimal and almost entirely reversible. And doing so would immediately demonstrate to the GOP that public opinion was emphatically not on its side – polls showed that the public reaction to going over the cliff would be both intense and heavily trained on Republicans. Throw in Obama’s post-election bump in approval ratings, and there was never a better time to hold out.
Instead, the emerging deal will reinforce the convictions that have made the GOP such a toxic presence in Washington. If Obama will cave even when he’s got all the leverage, when won’t he cave? Never, the Republicans will assume. If Obama’s too scared to stop bargaining and let the public decide who’s right in this instance, when the polls appear to back him, then he must think our position is more popular than he lets on. Suffice it to say, these are not sentiments you want at the front of Republicans’ mind as they prepare to shake him down over the debt limit in another two months. The White House continues to maintain that it simply won’t negotiate over the limit. After this deal, why would any Republican ever believe this?
Still it may be that Obama will be saved by his enemies again:
House Republicans can normally be relied upon to reject a deal that’s absurdly generous by any objective measure but falls short of their virtue-police standard of purity. They may well do so again… but that doesn’t solve the broader strategic problem.
Josh Marshall sees things just a bit differently:
For all of you trying to figure out what the unseen force is that prompted President Obama to take this deal now rather than simply go over the cliff and be in an even better position post-cliff, I think I have a good answer for you. All the arguments about Obama caving and being a bad negotiator and all the rest leave out one simple and fairly sufficient factor – Obama really wants a deal. That means more than it sounds like it means. He doesn’t want a deal at all costs. That greatly overstates it. But a deal to some real degree for the sake of finding common ground and having a deal is a big consideration for him. That’s not my personal disposition or the way I meet the world. But it is his. And once you get that, the storyline starts to make more sense.
And it all comes back to the debt ceiling:
Obama says that’s not negotiable. That’s exactly the right position. But it’s much, much easier said than done. Whether and how he’s able to pull that off will tell us everything about whether or not this deal made sense.
You mean it’s not over? New Year’s Eve is not supposed to be like that. The ball drops. Everything is new.
Yeah, and who believes that? Matthew Yglesias points out how this is all arbitrary:
It’s worth taking a minute to savor the full-on absurdity of this timing. Why have many people had their New Year’s Eve ruined? Well, because this is perfect timing. The new congress begins on January 3. But the new tax baseline begins on January 1. That means that if a bill passes the Senate on December 31, the House has two days under the new budget baseline before the lame duck session ends and senate legislation expires. This lets the Senate pass a bill that Obama says raises taxes (which it does, relative to 2012 law) how the House will vote on a law that John Boehner can say cuts taxes (which it does, relative to 2013 law) and thus you get a politically magical immaculate tax hike.
It’s all in the date you chose, and what chapter you think is closing. There’s some disagreement on the book itself here too, along with this:
Relative to what Obama had already agreed to, there are no spending cuts whatsoever in this package. In exchange, he ended up securing much less tax revenue than he was initially looking for. That’s an epic defeat for the “Fix The Debt” crowd, but even though liberals are disappointed with this they didn’t end up actually losing anything the way they were going to in deals that cut Social Security benefits or raised the Medicare eligibility age. Conservatives, meanwhile, can say that in the face of an objectively unfavorable situation they kept taxes remarkably low and have maintained their leverage to press for further spending cuts in February.
On to the next crisis!
It’s like the morning after New Year’s Eve. You wake up the next morning the same person in the same room – and in the same sorry body with the same troublesome issues. A page has been turned. A new chapter has begun – but it’s still the same plot with the same damned characters doing the same damned things. That’s why some of us simply ignore New Year’s Eve. It was always kind of a shabby joke. And that’s not just a West Coast thing.