I’ve said before that the best bargaining strategy for Republicans in the fiscal cliff is to cave immediately and pass Obama’s middle-class tax cuts (assist from Brian Beutler). Apparently Representative Tom Cole of Oklahoma is thinking along the same lines and urging his colleagues to do it.
This continues to be a not-very-popular line of thought in D.C. and has some wondering whether a very right-wing House member from Oklahoma has suddenly gone squishy. I think he’s just gone smart. Caving on the middle class tax cuts would hand the White House an important victory. Taxes on the rich would go up, and Republicans wouldn’t be able to stop it. On the other hand, they wouldn’t need to endorse the Obama tax hike and would remain free to keep campaigning for new tax cuts. More importantly, caving now would leave the budget sequester unresolved. That would create a new fight in which Republicans would have leverage. Obama doesn’t want the domestic sequester to take effect, and importantly he doesn’t really want the military sequester to take effect either. In fact, he’s promised that it won’t.
Basically by beating a tactical retreat on taxes, Republicans could engage in a new smaller-scale controversy in which they’d have the upper hand. It would also offer the opportunity to exploit the serious divisions that exist inside the Democratic coalition over the appropriate shape and scope of cuts to retirement programs. Total intransigence on taxes is making it easy for Democrats to stick together even though there’s relatively little real consensus in the Democratic caucus.