As public policy, the fiscal cliff deal has few merits to recommend it. But it does have one positive political consequence that has mostly gone overlooked: It substantially narrows the gap between the policy commitments we have made and the way the budget process officially presents them. Americans can finally have a cleaner—if not necessarily more productive—debate over what to do. Understanding why is somewhat complicated, but worth the effort.
There’s a great fiscal debate in Washington, and George W. Bush is winning it. In 2008, Barack Obama campaigned on a pledge not to reverse Bush’s tax cuts for the bottom 98 percent of taxpayers, a promise he has worked hard to honor. That locked in 80 percent of the Bush-era revenue losses. During the current negotiations, Obama’s initial offer includes $1.6 billion in new revenue over 10 years, which would leave intact about 60 percent of Bush’s tax cuts.
Two entrenched positions define the revenue dimension of the fiscal cliff debate—Republicans’ opposition to rate increases, and President Obama’s longstanding vow not to raise taxes on families making $250,000 per year or less. Each side has reasonable if not completely compelling arguments in favor of its position.