What to Keep in Mind When Judging Any Possible “Fiscal Cliff” Deal
Posted in: Barack Obama
A simple look at who holds the legislative and political leverage would reveal there is very little actual need for President Obama and Congressional Democrats to compromise with the Republicans on almost anything related to the so-called “fiscal cliff.”
Most of the things Obama is publicly saying he wants will either happen automatically, can be accomplished through executive action, or would be all but politically impossible for Republicans to deny him. Since Obama will never face re-election again (but most Congressional Republicans will), he is in better position to hold out in a game of political chicken.
Let’s go down the list. The tax increases on the wealthy are going to happen automatically at the end of the year when all the Bush tax cuts expire. In the new year the GOP can try to defend the wealthy by refusing to vote for a tax cut simply because it doesn’t cut taxes enough for rich people, but that would be a political nightmare for them. Many top Republicans and conservatives are openly admitting the party has no leverage on this.
Next is increasing the debt ceiling. The GOP thinks they have a lot leverage here but they don’t. The only reason they had “leverage” last time is because Obama was foolishly willing to help manufacture a crisis to try to get a grand bargain.
Obama can theoretically address this problem using the trillion dollar platinum coin, invoking the 14th amendment, or saying conflicting Congressional laws force him to ignore the debt ceiling. If Obama doesn’t want to take unilateral action on the debt ceiling, he can just threaten a government shutdown. There would still be enough tax revenue to pay bondholders, as well as for essential services, even after the debt limit was reached. Government contractors and Medicare providers, though, would start getting I.O.U.’s. Faced with so many angry rich people, the GOP would likely fold rather quickly.
The final big issue is the sequestration cuts. No one in either party seems to like them, but the military-heavy nature of the cuts means Republicans are most upset by them. If Obama just demands their repeal, it is hard to see how the GOP would be able hold out once faced with heavy lobbying pressure by the defense contractors. Obama doesn’t need their donations again, but Republicans in Congress do.
There are a few things that Obama publicly claims to want that he couldn’t get without compromise, such as an extension of unemployment benefits, but those make up only a small part of the overall negotiations.
This should be in the forefront of people’s minds when judging any deal Obama may or may not reach with Republicans. By simply being intransigent, Obama could get much of what he claims to want without giving anything to the Republicans in return. What Obama “gives up” should only be weighed against what he couldn’t have gotten eventually. Things like accepting a tax increase on the wealthy or raising the debt ceiling should not even be counted as a real concession by Republicans because they would be forced to accept those anyway.