Savvy strategy, not mandate, key for Obama on fiscal cliff
Obama hopes to use the seven-week negotiations over the “fiscal cliff” of expiring tax cuts and automatic spending reductions to lay the ground work for a grand bargain that would involve Republicans agreeing to higher revenue in exchange for Democratic agreement to slowing the growth of spending on entitlements such as Medicare. The president got an initial signal of Republican willingness to engage when House Speaker John Boehner, R.-Ohio, said the GOP would be "willing to accept more revenue under the right conditions,” referring to the possibility of a broad reform of the tax code.
Indeed, Obama and his Democratic allies feel confident that they wield substantial leverage in the cliff negotiations because of the scheduled expiration of all of the Bush-era tax cuts at the end of this year. If no deal is reached, the rates go will up and Republicans could face an uphill battle trying to insist on reinstating the cuts for the wealthiest Americans along with the renewal of middle-class tax breaks that Democrats are seeking.
Still, jumping off the cliff could bring huge political fallout to all players involved, including President Obama. The stock market might panic at the prospect of $500 billion in tax increases and spending cuts hitting an already sluggish economy and consumer confidence could plummet, a scenario that could play out as Obama is preparing to take the oath of office in January for a second time. And even if a temporary solution is found to the cliff, Obama must brace himself for extremely difficult negotiations, said Dick Gephardt, the former House Democratic leader and a veteran of past budget and tax negotiations.
“When you’re talking about big fiscal issues of the kind we’re talking about here, my view is that nobody has a mandate and nobody has leverage. There’s nothing good in any of this politically. That’s what you have to understand. From a politician’s standpoint, a member of Congress in either party, at the end of the day, they really don’t want to vote for any of this stuff because it’s all bad. It’s all pain. It’s all toxic,” Gephardt told a National Journal panel on the fiscal cliff on Wednesday.
Both Gephardt and former Republican Sen. Bob Bennett, who also spoke at the National Journal panel, said it would be crucial for Obama to draw from the lessons of the 2011 debt limit debacle and try a different approach to his negotiations with Congress that involves engagement, not just with Boehner and House Majority Leader Eric Cantor, R.-Virginia, but also efforts to reach out to a broad swathe of Republican and Democratic lawmakers as well as stakeholders outside of Congress.
“There are a lot of calculations going on right now at leadership levels, in both houses, in both parties, with the White House breathing a huge sigh of relief that the (pre-election) polls all were right” but also trying to figure out how to approach the fiscal cliff, Bennett said.
Many Democrats expect Obama to begin a campaign-style tour to try to rally support for his positions on the fiscal cliff and long-term budget issues. Even before the election, the White House began setting the stage for the upcoming negotiations, trying to reassure liberal advocacy groups about the importance of tackling the effort at a grand bargain. The White House believes that without a budget deal, it will be much harder to move on to other items on Obama's second-term agenda, such as immigration reform.
Bennett said Obama should consider at some point convening a large “summit” of lawmakers at Camp David or another location away from the Capitol. Ahead of the 1990 budget agreement under President George H.W. Bush, intensive rounds of talks took place at Andrews Air Force Base.
Criticizing the White House strategy during the 2011 debt limit talks, Bennett said Obama needs a “creative, get-down-in-the-weeds” approach this time. During the debt limit saga, Obama held a handful of secret meetings at the White House with Boehner that were later widened to include Cantor. While the talks covered the broad outlines of what a bipartisan budget deal might look like, they did not involve nitty-gritty details. “He was still the college professor at the University of Chicago who got a few of the faculty together and said let’s talk this through. Well, this process doesn't work that way,” Bennett said.
Speaking to reporters as he flew home to Delaware from Chicago on Wednesday, Vice President Biden acknowledged the enormous task ahead on fiscal issues. Pressed on his view of the message from the election, the vice president said: “My takeaway is that we've got a lot of work to do.”
Biden, who is sure to be a crucial player in the fiscal cliff negotiations, did signal that he thought that Democrats had a mandate on the tax issue, saying that Republicans needed to “digest” the signal voters were trying to send.
But House Deputy Whip Peter Roskam, R.-Illinois, sounded equally confident that Democrats eventually would give ground on the upper-income tax cuts, noting that prior to the election their public statements had sometimes left some “ambiguity about who’s rich,” with Obama putting the threshold at $250,000 in annual household income while some other Democrats suggested it might be better to peg it at $1 million. What that means, Roskam said, is that the president will be able to show "dexterity" and extend current rates to next year as a bridge to tax reform, Roskam predicted.