In the struggle with President Obama over taxes and the fiscal cliff, Republicans are their own worst enemy. They’re playing into Obama’s hands. By exuding fear and confusion, they’ve prompted the president to multiply what he requires for a deal to avert the cliff. Since Thanksgiving, he’s moved sharply to the left in his negotiating position. He’s rejected a compromise on raising income tax rates for the well-to-do, insisted on more tax revenues and higher spending, and ruled out all but modest concessions.
Obama’s conciliatory get-togethers with House speaker John Boehner—they met twice last week—have been all for show. He followed up one chat by sending a fresh proposal to Boehner with jacked-up levels of spending. Boehner and congressional Republicans were taken aback by the White House’s audacity, but they shouldn’t have been. They’ve all but invited him to raise the ante.
While hiking his demands, the president has refused to consider spending cuts until Republicans accept income tax rate increases for the top 2 percent of taxpayers. In effect, Obama’s team requires a concession by Republicans before serious negotiations can begin. It’s a ploy reminiscent of the Soviets, who wanted a reward just for coming to the negotiating table.
This has produced a stalemate. Leaks about progress in reaching a compromise are not to be believed. As of late last week, Obama and Republicans were further apart than when talks began. If no agreement is reached before January 1, roughly $400 billion in tax increases will go into effect immediately and automatic cuts in defense and domestic spending will follow. At worst, it might cause a recession. It’s really a fiscal slope, not a cliff.
The White House has pursued two strategies with Republicans, one aimed at compromise, the other at imposing Obama’s demands. After his reelection, Obama sounded ready to accommodate Republicans. At his press conference on November 14, he said he would consider alternatives to raising tax revenue through income tax rate hikes for the rich (Republicans hate rate increases). He also spoke favorably of tax reform and “entitlement changes”—high-priority issues for Republicans.
“I am open to new ideas,” he said. “If the Republican counterparts or some Democrats have a great idea for us to raise revenue, maintain progressivity, make sure the middle class isn’t getting hit, reduces our deficit, encourages growth, I’m not going to just slam the door in their face.”
Obama didn’t mention Boehner’s plan to raise $800 billion from closing loopholes and tax breaks for the wealthy, instead of by boosting their tax rates. But he expressed doubts that sufficient revenue could be raised that way. “You know,” he said, “the math tends not to work.”
The president shifted to a tougher strategy after Republicans indulged in weeks of public hand-wringing. They bemoaned the poor hand they’d been dealt politically, aired their anxiety over defending tax cuts for the rich, and spoke with trepidation of being blamed if Washington falls off the cliff and taxes rise for everyone, as the Bush tax cuts expire.
Republicans, especially members of Congress, were distressed and divided. Rather than rebut Obama, they negotiated with themselves, some insisting they should consent to rate hikes, others arguing they ought to oppose any tax increase. Their discussions were carried out in public. It was ugly.
The White House response to GOP torment was delivered the week after Thanksgiving. Obama wanted $1.6 trillion in new taxes, double the $800 billion Boehner had offered. He proposed a new $50 billion economic stimulus. He demanded the right to increase the debt limit, already in excess of $16 trillion, without congressional approval.
Obama echoed the I-want-more strategy in his speeches. Raising tax rates had become “a principle I won’t compromise on,” he told autoworkers in Michigan. Why? “Because I’m not going to have a situation where the wealthiest among us, including folks like me, get to keep all our tax breaks, and then we’re asking students to pay higher student loans . . . or some family that has a disabled kid isn’t getting the help that they need through Medicaid. We’re not going to do that.”
His hard line, by the way, took cuts in Medicaid off the table. Obama once talked about a 3-to-1 ratio of spending cuts to tax increases. Forget that. Rather than reforms, his aides favor Medicare cuts affecting current recipients, so long as Republicans propose the cuts.
Obama’s most ambitious demand was for a free hand to increase the debt limit. Before his reelection, maybe even a month ago, he wouldn’t have dreamed of asking for this. But now it’s one of his highest priorities. And why not? The debt limit vote in Congress gives Republicans enormous leverage in seeking reductions in spending. Obama wants to take that leverage away.
He’s still bitter about being forced to accept serious spending cuts as the price of raising the debt limit in 2011. “We can’t afford to go there again,” he told the Business Roundtable, the big business lobby. “I want to send a very clear message to people here: We are not going to play that game next year.”
Is there any question about what the president hopes to gain by stepping up his demands? Republicans believe Obama not only wants to exploit their disunity now, but also keep GOP divisions alive to help Democrats capture the House in 2014 and gain full control of Washington. Then his final two years in the White House could match his first two in advancing the liberal transformation of America.
Obama seems more cocksure than ever. “We’ve seen some movement over the last several days among some Republicans,” he told the CEOs. Last week, he predicted Republicans will cave. “I’m pretty confident that Republicans would not hold middle-class taxes hostage to trying to protect tax cuts for high-income individuals,” he told Barbara Walters.
A confident president against Republicans who are not confident at all—it’s not a fair fight. And for that, Republicans can mainly blame themselves.
Fred Barnes is executive editor of The Weekly Standard.