Obama Isn't Negotiating With Republicans on Fiscal Cliff

President Barack Obama isn't really compromising with Republicans when it comes to solving the fiscal cliff.

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President Barack Obama smiles in front of Christmas decorations as he listens as Mexico's President-elect Enrique Pena Nieto, not pictured, speaks prior to their meeting in the Oval Office of the White House in Washington, Nov. 27, 2012.
President Barack Obama smiles in front of Christmas decorations as he listens as Mexico's President-elect Enrique Pena Nieto, not pictured, speaks prior to their meeting in the Oval Office of the White House in Washington, Nov. 27, 2012.

America is at the edge of the fiscal cliff, staring straight down into the abyss.

The bill has come due for the orgy of spending that marked President Barack Obama's first two years in office. He and his supporters claim it kept things from getting worse but there is no real evidence to back that up. Unemployment stayed north for 7 percent for most of his first term. The post-recession economic recovery has been anemic; indeed it is the worst recovery since the end of the World War II.

[See a collection of political cartoons on the fiscal cliff.]

If the president and Congress fail to act, the government is going to go over what the punditocracy has labeled a "fiscal cliff," with higher taxes and mandatory spending cuts the result. These actions, taken together say many economists, could push the U.S. economy back into a deep recession.

Pollster Scott Rasmussen released numbers Monday showing that the American electorate thought President Obama was more willing to cut a deal than congressional Republicans. His telephone survey of 1,000 likely voters found that 42 percent of them believed the president would be willing to accept a deal that included both his tax increases and significant cuts in government spending. Nearly as many (40 percent) thought Obama would insist on tax increases only.

The findings, however, do not match what the administration is putting on the table. Through Treasury Secretary Timothy Geithner, the White House is suggesting it wants a deal composed of higher taxes, more spending—in fact spending in excess of the revenues the desired tax increases would generate—and one that gives the president the ability to increase the debt limit without having to go to Congress.

[Check out our editorial cartoons on President Obama.]

What Obama is asking for, therefore, is nothing less than the institutionalization of exactly the type of policies that brought America to the edge of the cliff in the first place—an offer that comes with the full knowledge that going over the cliff gives the president most of what he wants anyway.

It's no secret that the No. 1 item on the president's agenda is to raise taxes on America's top income earners. This includes not only individuals who do well but small businesses, which most often compute their taxes on the personal rather than the corporate side of the code. He casts it as a matter of fairness when it's actually a transparent bit of class warfare, the kind he used so successfully in November to mobilize those voters inclined to give him a second term.

If the country goes over the fiscal cliff, Obama gets the tax increases he says he wants—along with many he has not mentioned. These will come on top of the new taxes being used to help pay for Obamacare—meaning the economy is going to get a shock that will likely send unemployment way up once again. He also gets the kind of defense cuts he could never pass through Congress. They are presented as being so severe, so draconian, that even some Democrats would have to vote against them.

[See a collection of political cartoons on Congress.]

In that environment, Obama gets to come across as a tax cutter by sending to Capitol Hill a plan that would reduce rates on everyone but the wealthiest Americans and allow him to propose selective increases in defense spending. It would likely be left to Congress to come up with the ways to pay for these, which could mean further elimination of tax deductions even the middle class enjoy instead of eliminating the wasteful tax credits that helped big businesses like General Electric avoid paying any taxes in 2010.

The purpose of all this exposition is to put forward the case the President Obama really has no reason to negotiate in good faith with the Republicans in Congress. Either way—through a negotiated deal or by going over the cliff—the president gets much of what he wants. And, according to the available polling, the Republicans will get the blame. In politics that's called a "sweet deal." Unfortunately for him, given the economic realities either approach will trigger, the country will be in for a rough ride.

  • Read Nancy Pfotenhauer: What Obama Could Learn From Aesop About the Fiscal Cliff
  • Read Susan Milligan: It’s Business Execs—Not Obama—Who Don’t Get the Rules of Capitalism
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