Daniel Gross is right. The Republicans don’t have a plan and they don’t seem to understand what is happening to them. They have, however, finally made a counteroffer. Their offer is to raise $800 billion over ten years by reducing loopholes and deductions in the tax code. Of course, that is non-responsive to the administration’s repeated demand that the highest marginal tax rates go back up to a Clinton Era level. Floating Erskine Bowles’ plan (which is distinct from the Simpson-Bowles Report) is a little more constructive and actually signals some small sign of movement, but it is still non-responsive.
It appears that the Republicans have not internalized the fact that the Democrats are perfectly content to go over the fiscal cliff. It’s just not worth it to the Democrats to pass up this opportunity to break the Republicans’ psychosis about marginal tax rates. If they are unwilling to compromise because taxes will rise 4.6% on income over $250,000 then they cannot be negotiated with at all.
