Republicans Have Zero Leverage in the Lame Duck Budget Debate

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The basic fact about the post-election budget debate is that the Democrats and the Republicans both want to avoid the automatic austerity measures that start kicking in after January. The Bush tax cuts expire in full, the Republicans’ sequester cuts happen, and the payroll tax cut expires.

Republicans have a strong incentive to pretend that we need to strike agreement on a bill before January, because after January they lose all their leverage.

That’s because once the Bush tax cuts expire, what have they got? Tax rates will automatically reset to a higher level, so the only debate will be about how low they should go. If Republicans want to lower taxes at all, they’ll have to move closer to Barack Obama’s position or else there’s no deal and tax rates stay high.

There’s no good reason for Barack Obama to pre-compromise with the Republicans and strike a deal before January.

This entry was posted in Budget.

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