Third Cave's a Charm

"On Dec. 31, 2012, three weeks before the end of President Barack Obama's current term in office, the Bush tax cuts expire. Income tax rates will return to their Clinton-era levels. That amounts to a $3.6 trillion tax increase over 10 years, three or four times the $800 billion to $1.2 trillion in revenue increases that Obama and Speaker John Boehner were kicking around. And all Democrats need to do to secure that deal is...nothing."

"This scenario is the inverse of the current debt-ceiling debate, in which inaction will lead to an outcome - a government default - that Democrats can't stomach and Republicans think they can. There is only one thing that could stand in the way of Democrats passing significant new revenues on the last day of 2012: the Obama administration."

"Of course, the entire premise assumes that the tax cuts won't already have been extended by then. In a couple of months, after all, we're going to see the next hostage crisis as Congress debates a continuing resolution to fund the government. There'll be another one in 2012. And I'm sure the GOP will find another several opportunities to stage a hostage crisis."

A year ago many assumed Republican opposition to taxes was a negotiating stance that would yield a grand bargain reducing spending and raising revenue. Recent months proved that assumption wrong. Republicans will not allow the Bush tax cuts to expire. If the cuts lapse on Dec. 31, 2012, income tax rates would revert to Clinton-era levels, producing roughly a $3.6 trillion revenue increase over ten years. Democrats could secure that increase by inaction, with only the Obama administration able to prevent it. Expect ongoing hostage-like standoffs over continuing resolutions and repeated GOP leverage, with Obama repeatedly avoiding direct confrontation.

Read at Emptywheel