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Obama’s hard line on the fiscal cliff
President Obama opened talks on the looming crisis with a proposal to raise taxes on the wealthiest Americans.
President Obama signaled that he was ready to drive a hard bargain with Congress on the “fiscal cliff” this week, opening talks on the looming crisis with a proposal to raise taxes on the wealthiest Americans in order to generate $1.6 trillion more revenue over the next 10 years. The president began negotiations with House Republicans on his $4 trillion deficit-reduction plan, which also includes major spending cuts and some savings in Medicare and Medicaid, as the nation races toward the fiscal cliff—the combination of expiring tax cuts and automatic spending cuts set to kick in after Dec. 31. Economists warn that if all the Bush tax cuts expire and mandated spending cuts are carried out, about $600 billion will be sucked out of the economy next year, throwing it into recession. The president urged Congress to pass a bill “right now” preserving the Bush-era tax cuts for the 98 percent of Americans who earn less than $250,000. “We should not hold the middle class hostage while we debate tax cuts for the wealthy,” he said.
Republican House Speaker John Boehner indicated a new willingness to increase federal revenues through closing loopholes or comprehensive tax reform, but said raising tax rates was “unacceptable.” Senate Minority Leader Mitch McConnell accused Obama of “thumbing his nose’’ at the GOP, but said Republicans would accept new revenues in exchange for “meaningful reforms to the entitlement programs that are primary drivers of our debt.”
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Elections have consequences, said The New York Times. Raising taxes on the wealthiest Americans is what Obama campaigned on “and won on.” Yet John Boehner’s Republicans are resurrecting proposals his party “already offered, and voters rejected.” As we all know, the GOP has a “taste for political extortion,” but Obama has voters on his side, and the upper hand. “It is important that he stand firm.”
You’re forgetting something, said the Boston Herald. “The House remains in the hands of a majority of Republicans,” and they won elections too. Are they expected to just abandon their commitment to voters? The country is still divided on taxes, said The Wall Street Journal. Exit polls found that Americans dismissed the idea of raising taxes to cut the deficit “by nearly 2 to 1.” Obama may think he can “bludgeon Republicans until they give in,” but a bipartisan compromise is the only way to “avoid a fiscal and political crash.”
What the columnists said
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Obama has a foolproof option for dealing with Republican intransigence, said Paul Krugman in The New York Times. “Just say no, and go over the cliff if necessary.” The fiscal cliff isn’t a solid deadline. Tax hikes can be repealed retroactively without costing taxpayers a dime, and the economy wouldn’t begin hurting until several months into 2013. “There’s time to bargain.” Already, “cracks have appeared” in the Republicans’ wall of opposition to raising taxes, said Jonathan Chait in NYMag.com. Even Weekly Standard editor Bill Kristol said this week, “It won’t kill the country if we raise taxes on millionaires.”
The GOP shouldn’t cave, said Jonathan S. Tobin in CommentaryMagazine.com. “The president needs a deal far more than they do.” A prolonged standoff would batter the economy, crippling his second-term agenda before it’s even started. Congress, meanwhile, has little to lose. “But can Americans count on House Republicans to hold the line?” said Michael Tanner in NationalReview.com. Boehner has already signaled he’d accept additional revenue, giving up precious leverage before negotiations even began. “Having conceded on taxes, what does he have left to trade?”
Republicans can’t win this fight, said Matthew Yglesias in Slate.com. “There’s no leverage on the GOP side, and nothing for the parties to negotiate over.” If Obama does nothing, then all the Bush tax cuts will expire on Jan. 1. Then Democrats can pass their bill to extend just the middle-class tax cuts, and dare the GOP to commit suicide by blocking it. Boehner can bluff all he likes about resisting tax increases now. Come January, it will be “game over.”
