In the latest installment of The Perils of Pauline our heroes avoid the fiscal cliff... for now.
Obama got higher taxes on "the rich" in part by moving his difinition of "the rich" from $250,000 to $450,000. Republicans also got concessions on dividends and the estate tax.
But the current bill punted the question of spending cuts so a new Congress can calmly take it up in the shadow of a debt ceiling fight. Ezra Klein is interesting on this point - Republican leaders are selling this deal as tax hikes today and spending cuts to follow; Obama is now selling it as a tax hike down payment, with more tax hikes to come along with any spending cuts. Both sides can't be right.
That’s really why Obama’s comments posed a threat to a deal. The GOP’s congressional leaders want to tell their members that if they just vote for this modest tax increase now, then they can move onto the debt ceiling, where their enhanced leverage will let them force a deal that’s all spending cuts. Obama, in effect, said that’s not true. He said if Republicans raise taxes now, he’s going to pocket that tax increase and demand tax increases in the next deal, too.
Obama likely needed to say that. Republicans have had so much trouble wrangling their members in recent years that we forget that congressional Democrats can stage revolts, too. Earlier Monday, it seemed plausible that angry Senate Democrats would oppose the McConnell-Biden deal. Obama’s public explanation of his strategy was meant to persuade them that he really means it when he says he won’t permit further spending cuts without more revenues. By committing to that principle in front of the cameras, he made it much likelier that he’d stick to it in future negotiations.
But Obama’s remarks exposed the inconvenient truth that the two sides are selling the deal to their members by making mutually exclusive arguments about what will happen next.
Part of the problem is that Obama just is not very good at these negotiations, which is odd for a guy whose resume suggests he might actually be a watchable talk show host or effective group facilitator. Taking a victory lap before the deal was signed was arrogant and foolish. Or (dare we say it?) Obamian.
SO WHO IS HAPPY? Liberals Progressives are lining window ledges, and I think Paul Krugman is right about this:
OK, now for the really bad news. Anyone looking at these negotiations, especially given Obama’s previous behavior, can’t help but reach one main conclusion: whenever the president says that there’s an issue on which he absolutely, positively won’t give ground, you can count on him, you know, giving way — and soon, too. The idea that you should only make promises and threats you intend to make good on doesn’t seem to be one that this particular president can grasp.
And that means that Republicans will go right from this negotiation into the debt ceiling in the firm belief that Obama can be rolled.
At that point he can redeem himself by holding firm — but because the Republicans don’t think he will, they will play tough, almost surely forcing him to actually hit the ceiling with all the costs that entails. And look, if I were a Republican I would also be betting that he’ll cave.
So Obama has set himself and the nation up for a much uglier confrontation than we would have had if he had set a negotiating position and held to it.
And somewhere in here we need to find time in January for the Biden effort on gun control to be met with derision and disdain.