Cheney vs Norquist

The beauty of having a President who is former community organizer and knows a thing or two about power and leverage is starting to show.

As a result of the debt ceiling deal agreed to last summer, we're about to witness a showdown between the two most powerful factions in the Republican Party - the military industrial complex (as represented by Dick Cheney) and the no-taxes group (as represented by Grover Norquist).

The genius of President Obama and the Democrats was to time the automatic spending cuts agreed to in the debt ceiling deal (which include $55 billion/year to defense) to the exact same day (January 1, 2013) that the Bush tax cuts expire. Remember, those things happen if Congress does nothing. So this time the old tried-and-true tactic of Republican obstruction won't work. They have to proactively pass something to stop it.

The line the Democrats are drawing is that in order to stop the cuts to defense spending, Republicans will have to agree to end the Bush tax cuts for the wealthy. In other words, they're saying that Republicans will have to pick one - they can't have both. That's what sets up the Cheney/Norquist duel.

We all know that last week Cheney went to Capitol Hill and argued on behalf of his Haliburton buddies against allowing any defense cuts. Meanwhile, Grover Norquist vows to fight on.

He said the example of a deficit grand bargain with entitlement reforms in exchange for a “penny” in tax increases is a “bizarre straw man” that does not exist. Instead, Democrats are seeking trillions in tax increases that must be resisted, he said.

Personally, I'd put my money on Cheney winning this one (much as it pains me to say it that way). That's essentially how Bruce Bartlett (former Reagan advisor) put it in the Financial Times this week.

The obvious way out of this dilemma is simple: raise taxes instead. Achieve the same amount of deficit reduction but by through higher revenues rather than defense spending cuts.

But more than anything, I love how he described the situation.

Therefore, Republicans are between the rock of defense cuts that they view as unpalatable and the tax pledge hard place...

Republicans are not yet ready to embrace a tax increase even to prevent defense cuts. But it is clear that they are ultimately going to have to choose one or the other.

So sit back, grab the popcorn, and enjoy the Cheney vs Norquist show. While you're at it - give a shout out to our President and Democratic members of Congress for setting it up.