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Happy Days Here Again?

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Michael McAuliff
Michael McAuliff

It's looking like a very merry holiday season with an extremely prosperous new year ahead for the lobbying community. Fiscal austerity is an ill wind that does blow some good to those paid to influence where the painful spending cuts will be made. And the growing possibility of tax reform is icing on the cake.

There are a lot of big, expensive decisions to be made and no obvious standard for separating the victims from the beneficiaries. Smart money -- and all money big enough to be a target is smart -- will not wade into this debate unrepresented.

This forecast assumes that Congress will avoid sending us all over the fiscal cliff of big tax increases and giant spending cuts. But even if it doesn't, the very lack of specificity on the spending reductions will keep the K Street crowd fat and happy for many months.

Some may see it ironic that the fiscal crisis engineered by the Tea Party that found business as usual intolerable is creating a boom for the very business these political outliers hate most, but those of us in Washington construe it as confirmation that within our political casino, the lobbyists always win.

A growing number of splits within the business community is beginning to resemble the political atmosphere in the mid-1980s where businesses hastened to defend their parochial interests once it was clear the tax reform train was about to leave the station. Things seem to be changing very fast.

A little more than a month ago, businesses large and small seemed united in their support of Mitt Romney's presidential bid and economic policies. He promised something for everyone and the lack of detail that so frustrated the press permitted broad support from the business community. Small businesses, multinational corporations and the financial community, which has a discrete set of priorities, all saw Romney-Ryan as a winning ticket.

The migration we're now seeing toward Obama was inevitable, but it is being greatly accelerated by the fiscal crisis engineered by House Republicans. Each new poll suggesting growing public support for the president's posture further convinces businessmen that holding their nose to get a place on this train is preferable to being run over by it. Successful businessmen may not be Democrats, but they're not blindly ideological or stupid either.

Today business represents three views that only partly overlap. Most predictable and stable is the small business community, which is generally taxed at the personal income tax rate and thus remains unalterably opposed to Obama's suggestion to raise the top rate. Executives who run multinational corporations have other fish to fry. If they could get the corporate rate cut -- or other changes made that would lower their firm's tax bill -- they could live with higher individual rates and would probably get raises that would offset any difference in their personal tax bills. People on Wall Street have a different perspective because the tax changes that would create a boom for them differ from those that would most help the corporate community.

Tax reform is a complex game today but the structure is simple. Some pay more than they did before and some pay less, but the total collected increases to ease government deficits. Success is easier if the latter group is larger. It's a game everyone with enough income to justify hiring a lobbyist must play.

Don't be fooled by the overheated rhetoric from our political leaders or, more predictably, the media; we're back to business as usual in Washington. And we can thank those political outsiders who demanded we do things differently.

More Jaffe political commentary appears at Punditwire.com