The fiscal cliff isn't scary to anyone but Republicans

Taxmageddon could be a blessing in disguise.

Now that Barack Obama has won re-election, the focus in the US has turned to the next crisis brewing: the fiscal cliff. The event was named by Fed Chairman Ben Bernanke, and although I have always preferred "taxmageddon", it's stuck.

The "cliff" is the automatic introduction of roughly $600bn of tax increases and spending cuts, and is due to hit in early 2013, and the nature of what it involves has led some, like Annie Lowrey, the New York Times' economics reporter, to argue that a more apposite name might be the "austerity cliff". In fact, if it hit, the fiscal cliff would be one of the most severe austerity policies the world had ever seen. This chart, from Quartz's David Yanofsky, lays it out in comparison to other notable contractions:

But while the cliff is indeed dangerous if the country were allowed to jump off it without a safety net, the political danger it poses for Barack Obama has been overstated.

The policy has been compared to the debt ceiling debacle of last summer, and the similarities are clear. The executive may well end up facing a similar level of obstructionism from a Republican congress determined to use the crisis to their political advantage, and the hard-and-fast deadline of the negotiations – a rarity in politics as normal – lends the whole thing an extra edge.

But the difference between the two comes from the results of letting that deadline lapse – and it's there where the cliff could be a blessing in disguise for Obama.

The debt ceiling involved the Republican party turning what should have been a routine vote to raise the amount of debt that the US can hold (the ceiling has been raised roughly once a year since it was introduced) into a chance to gain huge concessions on the level of spending the government was planning. The game was entirely played out on a political stage, with each side trying to convince the other that if the deadline hit and a full government shut-down ensued, their opponents would take the blame in the eyes of the public.

The negotiations themselves were relatively the simple: the Democrats wanted to change nothing, the Republicans wanted to change something, and the argument was about where those two extremes should fall.

The debates around the fiscal cliff are different, though. Each side wants some, but not all, of the programs which are expiring to be extended. So while the Democrats want to let the Bush tax cuts expire for the richest Americans, the Republicans call for, in the words of Slate's Matt Yglesias:

Draconian reductions in the federal government's commitment to financing health care for the disabled, the elderly, and the poor.

So far, so much like the debt ceiling. The difference comes after the deadline passes.

Currently, the Obama administration is, in effect, arguing for tax rises, while the Republican party argues for spending cuts. But if the deadline passes, what happens is that massive tax rises and spending cuts kick in – far bigger than both parties desire. If that happens, the negotiating calculus changes: from that point, both parties agree on the need for tax cuts and spending increases, and just disagree on the magnitude of it.

The Democrats are then put in a position where they can offer the Republicans targeted tax cuts – re-instating the payroll tax, and the Bush tax cuts for those earning under $250,000 – and even though the Republicans would prefer more, they'll be inclined to take it because it's a preferred alternative.

Similarly, so long as the spending increases the democrats offer are preferred to keeping the across-the-board cuts of the fiscal cliff, the Republican party is likely to take them.

It all comes down to who has the power to set the agenda – and in this situation, that seems likely to be president Obama.

If the players were truly rational actors, of course, all of this would mean that the fiscal cliff wouldn't even need to hit; the Democrats ought to be able to explain this endgame, and the Republicans accept it. That seems unlikely to happen.

The fiscal cliff could actually be a blessing in disguise for Obama. By putting him and the Republicans on the same side of the status quo, he could succeed in opening his second term facing the most obstructionist congress in history with a grand bargain that creates a more liberal America.

Or the Republicans may just throw the baby out with the bathwater and hurt their interests, and America's, to score points against the president. Again.

Cliffs of the non-fiscal variety. Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

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Leave will leap on the immigration rise, but Brexit would not make much difference

Non-EU migration is still well above the immigration cap, which the government is still far from reaching. 

On announcing the quarterly migration figures today, the Office for National Statistics was clear: neither the change in immigration levels, nor in emigration levels, nor in the net figure is statistically significant. That will not stop them being mined for political significance.

The ONS reports a 20,000 rise in net long-term international migration to 333,000. This is fuelled by a reduction in emigration: immigration itself is actually down very slightly (by 2,000) on the year ending in 2014, but emigration has fallen further – by 22,000.

So here is the (limited) short-term significance of that. The Leave campaign has already decided to pivot to immigration for the final month of the referendum campaign. Arguments about the NHS, about sovereignty, and about the bloated bureaucracy in Brussels have all had some utility with different constituencies. But none has as much purchase, especially amongst persuadable Labour voters in the north, as immigration. So the Leave campaign will keep talking about immigration and borders for a month, and hope that a renewed refugee crisis will for enough people turn a latent fear into a present threat.

These statistics make adopting that theme a little bit easier. While it has long been accepted by everyone except David Cameron and Theresa May that the government’s desired net immigration cap of 100,000 per year is unattainable, watch out for Brexiters using these figures as proof that it is the EU that denies the government the ability to meet it.

But there are plenty of available avenues for the Remain campaign to push back against such arguments. Firstly, they will point out that this is a net figure. Sure, freedom of movement means the British government does not have a say over EU nationals arriving here, but it is not Jean-Claude Juncker’s fault if people who live in the UK decide they quite like it here.

Moreover, the only statistically significant change the ONS identify is a 42 per cent rise in migrants coming to the UK “looking for work” – hardly signalling the benefit tourism of caricature. And though that cohort did not come with jobs, the majority (58 per cent) of the 308,000 migrants who came to Britain to work in 2015 had a definite job to go to.

The Remain campaign may also point out that the 241,000 short-term migrants to the UK in the year ending June 2014 were far outstripped by the 420,000 Brits working abroad. Brexit, and any end to freedom of movement that it entailed, could jeopardise many of those jobs for Brits.

There is another story that the Remain campaign should make use of. Yes, the immigration cap is a joke. But it has not (just) been made into a joke by the EU. Net migration from non-EU countries is at 188,000, a very slight fall from the previous year but still higher than immigration from EU countries. That alone is far above the government’s immigration cap. If the government cannot bring down non-EU migration, then the Leave argument that a post-EU Britain would be a low-immigration panacea is hardly credible. Don’t expect that to stop them making it though. 

Henry Zeffman writes about politics and is the winner of the Anthony Howard Award 2015.