NEWS BLOG (WSAU)  People sometimes ask me about current events. ‘What do you think will happen?’ On the fiscal cliff, I would have told you that a compromise is coming. It’ll be at the 11th hour. It always is with the federal government.

Until yesterday.

As of now, my thinking is that we're going over the fiscal cliff.

What changed my mind?

President Obama’s proposal, delivered to Capital Hill by Treasury Secretary Timothy Giethner, is such a step back that an agreement probably isn’t possible. Usually in negotiations both sides move closer together. The President’s proposal moves further apart.

What’s in it? The tax hikes begin immediately. Spending cuts, which aren’t specifically spelled out, won’t happen until a year from now. There’s no plan for entitlement reform. Or tax reform. There’s a mini-stimulus program of $50-billion for the new year. And the proposal would allow the President, not Congress, to raise the debt ceiling. Even Republicans who might go squishy on higher taxes for the rich, can’t go along with the rest.

There are two lessons the GOP should remember: spending cuts, when promised later, never happen. The entire debate over sequestration, which was part of the deal for raising the debt ceiling last year, now centers on keeping spending cuts from occurring. Of course, the debt ceiling has already been raised – and will need to be raised again in late 2013. The other lesson is that temporary tax deals, like the kind George W. Bush pushed through Congress, are always a bad idea. It’s impossible for citizens and companies to make financial decisions when tax policy is nothing more than shifting sand. And our government has never met a deadline that it can’t procrastinate up to and past.

President Obama says he wants to raise taxes on the wealthy to levels of the Clinton administration. He notes that the economy did very well back then. Republicans are such bad negotiators that they can’t even land on the right response: "well then, let’s return all of our nation’s finances to Clinton-era levels.” Pre-Bush, taxes were higher for everyone. If we return to Clinton-era budgeting, federal spending would be $6-trillion less than it is today. That's not realistic -- the number of people drawing government retirement benefits, medical benefits, and food assistance are much higher now.

The President won the election. There’s no incentive to compromise. Most rank and file Republicans believe that a vote for them - for divided government - is just as legitimate a choice from the voters.

The political spin will be fascinating. The news coverage and the blame game would be entertaining. Come January 1st, I think we’ll be talking about going over the cliff.

Chris Conley
11.30.12