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Matthew Towery Columnist

Published Wednesday, December 19, 2012

Republicans must ignore all calls and jump off cliff

I remember it well. It was Christmastime 1995, and much of the business establishment seemed furious with then-Speaker Newt Gingrich. As his political chair, I was hearing them out. Moreover, I was by then CEO of one of the nation’s largest producers of corporate annual reports -- big-ticket items -- so I was listening intently.

But I had no influence. Bill Clinton was having nothing to do with Newt’s threats to “shut down” the government, and that is exactly what Newt did -- twice -- both in December 1995 and again in January 1996. The result? Clinton ultimately agreed to contain the budget, endorsed capital gains reform and declared that the “era of big government is over.”

Oh, yes, they called Newt the “Gingrich Whole Stole Christmas,” and a good man but weak presidential nominee, Bob Dole, paid the price for Newt’s following unpopularity -- or more likely, the popularity of Clinton, who appeared more moderate and pro-business as a result of Gingrich freeing him up to be the true moderate he was in those days. But few remember that it was Clinton whose popularity dipped during the shutdown. How quickly the public forgot and still does -- a point worth noting.

While nothing from generation to generation is completely comparable, Gingrich and his fellow Republicans stuck their necks out against a growing public outrage and forced real change in this nation. It may be the most recent time such a brave act took place.

I recognize “falling off the cliff” is viewed as the equivalent of not passing TARP on the first round in the House during the 2008 monetary meltdown. But do these business leaders really believe they are going to get the type of relief they need -- keeping taxes on dividend-yielding income low, for example -- in some last-minute agreement cobbled together between the White House and Congress? If so, they are fooling themselves.

This is more about the idiotic agreement to surrender to automatic sequestration within the federal government, which will emerge on Jan. 1 if no deal is reached -- and more specifically is driven by a desire to preserve defense spending. No one is against spending necessary dollars on defense, or other areas of government. But if Republicans are ever going to quit supplying additional money for the administration to expand the so-called “welfare state,” now is the time.

Here’s one example. Just days after Christmas, a large number of unemployment payments will expire. Sure, the GOP will get the blame for that, but those who care about it will never vote GOP and, moreover, will find President Obama and Congress rushing to their rescue -- oh, and that requires Republican votes, which creates leverage in future negotiations.

And yes, taxes will automatically rise on virtually every category of taxpayer, and their payroll deduction will increase, and the Obamacare tax will kick in -- all of which will cause most working Americans to realize just how good they had it under the “bad, bad George W. Bush.” That will hopefully lead to quicker real negotiations between Democrats and Republicans and a more realistic reworking of the tax system and cuts in spending.

If Congress and Obama kick the can down the road with a “tax the rich” temporary solution in December, Obama will roll everyone next year. Promises by the administration of spending cuts in the future or assertions that “existing cuts” are future ones are hollow and silly. What leverage will the GOP have next year that will be stronger than the cards they hold now? The answer: None.

As a former GOP legislator, I was notorious for working with Democrats to reach a common ground. But in this case, there is no common ground. President Obama truly believes in using the excuse of “the rich,” which never differentiates a Bill Gates from a farm owner or small-business person, as a means not of balancing budgets, but reengineering the social fabric of America. That’s his gig. I get it.

But Republicans will just keep losing ground if, every time the threat of a crisis arises and markets take a temporary dive, they cave in to compromise that means giving up more and more of what they allegedly stood for in the first place.

Hold your nose, Republicans, and take a dive off the cliff into the uncertain waters of temporary unpopularity. You won’t drown, and you will force the other guy to have to start swimming just as hard.

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