More pressure is on Obama with the fiscal cliff negotiations

There seems to be an assumption that with the fiscal cliff debate, President Barack Obama has the upper hand and that Republicans are under pressure to cave to the president’s demands for $250K-plus, or $400K-plus tax hikes and virtually no spending cuts. I disagree with that assessment. I think the pressure is on President Obama, who is locked into a situation with no result that will be favorable to his political fortunes.

First, the bravado about the president letting the deadline pass and blaming Republicans for the tax hikes, sharp cuts and ensuing recession is fantasy thinking. The GOP may be blamed for a little while by administration acolytes in the Washington media, but over time the president, as always, will take the lion’s share of the blame for the adverse economy. It’s his economy.

Second, there’s a reason Obama only wants lots of tax increases and little cuts. For him to agree to any changes in Medicare or Social Security, such as an age eligibility change, or a reduction of benefits based on income, would be construed as a betrayal of his liberal base who stuck by him through tough economic times and the re-election. Consider the consequences: Here’s President Obama, who spent hundred of millions of dollars telling folks that Mitt Romney wanted to reduce their entitlements, actually doing that in the fiscal cliff negotiations. His support among the Democratic Party base would crater into indifference.

House Speaker John Boehner has a weak alternate plan out there that would protect Americans earning fewer than $1 million from tax increases. That’s it, and the fiscal cliff negotiations are pushed out to the future. It’s a pretty crappy deal, but Obama may be forced to accept it, with perhaps a face-saving reduction to $800,000 or so. The president simply has too much to lose if the very slow economic recovery ends and the recession resumes.

The best solution is no income tax cuts, but hundreds of billions of dollars in new tax revenue through tax reform, similar to 1986. Deductions could be considerably tightened and loopholes ferreted out and closed. That could be accompanied by a modest stimulus bill and the tepid spending cuts the president has proffered. But that would also anger the president’s base, which has been told repeatedly the past two years that those earning more than $250,000 a year must be taxed higher.

 

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8 Responses to More pressure is on Obama with the fiscal cliff negotiations

  1. Heather Rothey says:

    Don’t know if you are aware: but there all ready cuts, based on income. They got me by the short hairs because SSD is my income.

    • Doug Gibson says:

      Heather, I’d like to know more about this. I was under the impression that there would be small increases in Social Security payments in 2013.

  2. Brent Glines says:

    Ordinarily, I would agree, but after the last election, I’m not so sure, particularly that part about, “…the president, as always, will take the lion’s share of the blame for the adverse economy. It’s his economy.”

    If that were true, Obama would never have been reelected. I think the problem is that we have too many people who are dependent upon getting free stuff, and thus we have a pathological political situation right now because of it. I’m afraid things will have to crash, and crash hard in order to bring sanity back to our fiscal state.

  3. Mark Shenefelt says:

    The trouble, as usual, is that the politicians still are crafting their supposed solutions based on the best political protections for themselves and the best way to stick the other side with the blame for whatever actions are taken. It’s predictable and just comical.

  4. Midwinter says:

    “I disagree with that assessment. I think”

    “is fantasy thinking. The GOP may be blamed for a little while”

    “would be construed as a betrayal of his liberal base”

    “His support among the Democratic Party base would crater into indifference.”

    “the president, as always, will take the lion’s share of the blame for the adverse economy.”

    “The president simply has too much to lose”

    “The best solution is no income tax cuts, but hundreds of billions of dollars in new tax revenue through tax reform, similar to 1986.”

    This is exactly the kind of reasoning that won Mitt Romney the White House in 2012. Keep it up, Doug!

  5. Stormin Norman says:

    I totally disagree the Rs will be blamed! If you didn’t catch it this is Obama’s last term so who cares if he takes any blame or not! As far as who will win —– the Ds. We already have significant cuts that will take effect for military and social programs and it would probably be best if they did take effect caused by Rs. With higher taxes on the middle class starting 1 Jan, it will set the stage so true tax reform can occur next year instead of worrying about silly immigration and gun proposals that are DOA anyway! Maybe a gun proposal will pass but only to whitewash the issue not anything substaintial!

    • Decider says:

      Ah yes — see nothing, say nothing, hear nothing, vote for nothing — these are the Republican mantras of intransigence that will sweep pugs back into office?
      Just double-down on irrationality and lunacy — gun masacres mean the country needs MORE GUNS — a growing economy needs MORE ROMNEY — Science needs LESS Science while man-made climate change/environmental disasters need MORE coal mines and fractured oil wells.
      Nothing new here Doug — you’ve CONTINUED (for the last 3 to 4 years) on under-estimating the President and supporting a FAILED ticket that celebrates the Tea-publican ideology of holding a new tea-party every time far-right crazies shriek cataclysm and doom about Obama.
      How’s that working out for you ?

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