Obama Shows His Upper Hand on 'Fiscal Cliff' Negotiations

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NOVEMBER 9, 2012

Obama Shows His Upper Hand on 'Fiscal Cliff' Negotiations

President Obama sent Republicans a message on Friday: I won. Get over it. 

He didn’t put it quite that way, of course. Instead, he gave some formal, prepared remarks about economic policy—specifically, how he would like Congress to address expiration of the Bush tax cuts and the implementation of some automatic spending cuts, both of which are scheduled to take place on January 1. Dealing with this “fiscal cliff” will likely be the primary political preoccupation of the next few months. And, over the last few days, Republican leaders have made a series of statements about the tax portion of the debate, hinting at how they intend to approach negotiations.

Exactly what message the Republican are sending depends, in part, on which statements you consider and how you interpret them. House Speaker John Boehner, for example, has generally struck a conciliatory tone: "I don’t want to preclude anyone who might have a good idea of how we move forward," he said on Friday, not long before Obama spoke. But Boehner on Thursday told ABC's Diane Sawyer, "Raising tax rates is unacceptable. And frankly, it couldn’t even pass the House." Senate Minority Leader Mitch McConnell has been even more blunt. In a statement released to Breitbart News, McConnell said:

One issue I’ve never been conflicted about is taxes. I wasn’t sent to Washington to raise anybody’s taxes to pay for more wasteful spending and this election doesn’t change my principles. This election was a disappointment, without doubt, but let’s be clear about something: the House is still run by Republicans, and Republicans still maintain a robust minority in the Senate. I know some people out there think Tuesday’s results mean Republicans in Washington are now going to roll over and agree to Democrat demands that we hike tax rates before the end of the year. I’m here to tell them there is no truth to that notion whatsoever.

Boehner, at least, may be open to tax changes that raise revenue by closing loopholes, rather than raising rates. But, as the Washington Post's Suzy Khimm points out, loopholes alone can't raise that much revenue. And Boehner's ability to rally his caucus around a deal remains as questionable as ever. In other words, the Republican position doesn't seem much different than the one Republicans held in their last negotiation with Obama, during the debt ceiling debate in the summer of 2011. 

Obama on Friday made clear he thinks circumstances have changed since then:

...this was a central question during the election. It was debated over and over again. And on Tuesday night, we found out that the majority of Americans agree with my approach—and that includes Democrats, independents, and a lot of Republicans across the country, as well as independent economists and budget experts. That’s how you reduce the deficit—with a balanced approach.

Obama also framed the issue as a clear choice: If the wealthy don’t pay more, he said, the poor and middle class will end up paying more, directly or indirectly. “I am not going to ask students and seniors and middle-class families to pay down the entire deficit while people like me, making over $250,000, aren’t asked to pay a dime more in taxes. I'm not going to do that," he said. After the remarks, White House press secretary Jay Carney said that Obama stands by his threat to veto legislation extending tax cuts for the wealthy.

The administration was not quite as emphatic when it came to another issue: what kind of spending cuts Obama might accept as part of an eventual deal. During the prepared remarks, Obama reiterated his support for changes to the "health care system." That presumably means Medicare and Medicaid changes that would affect providers (drug makers, doctors, hospitals, etc.) without reducing benefits directly. But when a reporter (Laura Meckler of the Wall Street Journal) asked Carney about specific Medicare changes, such as raising the eligibility age from 65 to 67, Carney said he wouldn't go into such detail. Obama was open to that proposal during the 2011 debate and liberals (like me) are watching nervously to see whether he'll consider that idea again.

But liberals will (and should) be pleased by something else Obama said on Friday. At the very beginning of his remarks, Obama indicated that the primary, short-term focus of economic policy should be creating jobs—ideally, by passing the proposals he laid out a year ago (as part of the American Jobs Act) and championed during the campaign.

Many, and quite possibly most, mainstream economists agree that the economy still needs bolstering. Broadening the economic discussion to include job creation, as well as deficit reduction, would make that possible.

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posted in: politics, abc, congress, senate, senate, diane sawyer, jay carney, john boehner, mitch mcconnell, obama, the plank

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