A Fiscal-Cliff Primer
The GOP should lay out the stakes.


Jim Talent

10) Q. Can’t the House Republicans stop the tax increases by passing a law on their own?

A. Read Articles I and II of the Constitution.

11) Q. Are there any spending reductions scheduled to go into effect?

A. Yes. The “sequester” will also begin on January 1. The sequester was enacted as part of the budget deal in 2011. The sequester imposes approximately $1 trillion in spending cuts with entitlement spending almost completely exempted. Half of the cuts — almost $500 billion — will come out of the defense budget, even though defense spending is only about 16 percent of the budget. If the sequester goes into effect, the defense budget will be cut by $50 billion next year alone.

12) Q. What will be the effect of the defense cuts on the military?

A. Secretary of Defense Leon Panetta has said it would be “devastating.” The chairman of the Joint Chiefs of Staff has said it would be like “shooting ourselves in the head.” The cuts will also cost more than a million jobs around the country and cause lasting damage to the defense industrial base.

13) Q. The sequester does contain some cuts to non-defense discretionary spending. Don’t the Democrats want to prevent that?

A. Not as much as they want higher taxes. Besides, since they control most of the government, they figure they can restore the spending next year and perhaps even increase it because of the additional revenue they expect.

14) Q. So what leverage do the House Republicans have in their negotiations with the president?

A. See the answers to questions 6–10 and 13. In addition, the president has a major advantage because the fiscal-cliff issues are coming up outside of the regular budget process. He can isolate the tax issue without having to answer for his failure to propose real budget reform.

15) Q. What should the House Republicans do?

A. Stop wasting valuable time by counting on negotiations with people who won’t advance a serious plan. Actually begin legislating their agenda. Pass a bill out of the House that postpones all the tax increases as well as the defense cuts for one year. Use the debate on that bill to make a case to the public. Make the defense cuts and tax hikes, and the resulting job loss, a major issue. If the Senate Democrats don’t take up the bill, their failure to act will become an issue. If they do take up the bill, Republicans in the Senate can make the economy and the defense cuts a major point of debate.

If the Democrats take action to postpone at least the defense sequester, that will be an important point gained. If they don’t, then they and the president will clearly be responsible for the damage to national security and the job losses in the defense industry.

In addition, Republicans should begin preparing for next year. Republicans should announce that under no circumstances will they agree to a debt-limit increase beyond the next session of Congress (which ends in the fall of 2013) without real budget reform. Next year, the advantage will shift to Republicans. They already have a good budget plan (the Ryan plan). They can work on tax reform that will create jobs by reducing rates — wherever rates are at that point — and reforming deductions.

In the first three months of next year, the president will have to make an inauguration speech and a State of the Union address and propose a budget. That will be the time when maximum pressure can be applied on the administration to propose real entitlement reform, which will expose the divisions within the Democratic party and be the first real step toward actually reducing the deficit.

Whether this plan will work depends on how much it moves public opinion. But it’s the best chance to avoid a loss on taxes, and it offers real hope of preventing irreparable damage to national security and getting a budget plan next year that will prevent national insolvency. The stakes are too big for Republicans not to try.

 Jim Talent is a former member of the Senate Armed Services Committee and a fellow at the Heritage Foundation specializing in military affairs.


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