Analysis: Obama could risk going over 'cliff'

It may be just a bluff or a bargaining ploy, but the White House is signaling that President Barack Obama is willing to let the country go over the "fiscal cliff," a hard-line negotiating strategy aimed at winning concessions from Republicans on taxes.
Associated Press
Dec 5, 2012

If Washington really does fail to avert the looming series of tax hikes and spending cuts, the White House will portray Republicans as the culprits for insisting on protecting tax cuts for the wealthy, an effort the administration is laying the groundwork for now.

"This is a choice of the Republican Party," said Dan Pfeiffer, White House communications director. "If they are willing to do higher rates on the wealthy, there's a lot we can talk about. And if they are not, then they'll push us over the cliff."

But going over the cliff also would be full of risk for a president fresh off re-election and facing at least two more years of divided government.

Ending the year without a deal could roil financial markets and dent consumer confidence just as the economy is strengthening. It could make it harder for Obama to get Republican help on his second-term priorities like overhauling the immigration system and the nation's tax code, or in getting potential Cabinet replacements confirmed.

And it would signal to the country that the president's campaign prediction that the GOP "fever" would break following his re-election was a pipe dream.

House Speaker John Boehner says Obama is playing a risky game. "If the president really wants to avoid sending the economy over the fiscal cliff, he has done nothing to demonstrate it," the speaker said.

White House advisers say the president wants to avoid going into next year without a tax and spending deal, a scenario they say would hurt the economy. Obama, addressing business leaders Wednesday, said the White House and Republicans could reach an agreement "in about a week" if the GOP drops its opposition to raising taxes on families making more than $250,000 a year.

"If we can get the leadership on the Republican side to take that framework, to acknowledge that reality, than the numbers actually aren't that far apart," Obama said.

But with few public signs that Republicans are close to taking that step, administration officials are hardening their warning that Obama willing to risk going over the cliff.

Of course, the White House warning could be a bluff, offered in the belief that Republicans are unlikely to back down on taxes unless they believe Obama is willing to go over the cliff.

The White House says Obama's firm stand on tax rate increases for the wealthiest 2 percent of Americans is driven by economics. The debt-saddled country can't afford to continue with the George W. Bush-era tax cuts, the president and his advisers argue.

Obama has made that case to Republicans before only to back down in the final stages of negotiations. But this time around, the president and his team believe they hold the political leverage.

There is some evidence to bolster that notion. Taxes were a centerpiece of the presidential campaign, with Obama running on a pledge to end the Bush tax cuts for the wealthiest Americans and return their rates to where they were in the 1990s, when the economy was thriving.

Exit polls showed that 60 percent of voters supported that position, an even higher percentage than backed Obama's re-election.

A new poll also suggests a majority of Americans would blame Republicans if the government goes over the fiscal cliff. Just 27 percent of those surveyed said they would blame Obama, compared with 53 percent who said they would point the finger at the GOP, according to the Washington Post-Pew Research Center Poll.

Seeking to cement those impressions, the White House is casting Republicans as willing to forgo tax cuts for the middle class in order to protect lower rates for wealthier Americans. Rates for all income earners will go up at the end of the year if both sides can't reach a deal.

In turn, Republicans say Obama is acting like a stubborn partisan who will put the economy in peril in order to get his way.

"My sense is the White House wants to go over the cliff," said Tony Fratto, a former Treasury and White House official under President George W. Bush. "That may be the only way they get rates they want."

Going over the cliff could mark a new low in the relationship between the president and congressional Republicans. While the contentious debates earlier in Obama's first term over funding the government and raising the nation's borrowing limit went right up to the edge, both sides were always able to reach a deal.

As Obama ran for re-election, he sought to assure voters weary of Washington's bickering that things would be better if he won a second term.

Speaking to supporters in June, he said, "I believe that if we're successful in this election — when we're successful in this election — that the fever may break."

"My hope, my expectation, is that after the election, now that it turns out that the goal of beating Obama doesn't make much sense because I'm not running again, that we can start getting some cooperation again," he added optimistically.

(This is an AP News analysis.)

Comments

deertracker

Give it a rest with the "free stuff". It's a tired campaign talking point that failed. The Cons lost the battle and the "bigger war" and that is why they may be done for decades.

the office cat

Anybody studied the Whigs? Interesting.

DBDBDB

Free Stuff is a campaign strategy by Obama that won the election (barely) for him. Free abortion, free birth control, free healthcare, more foodstamps, welfare...on and on and on. The problem is the takers, do now or will soon, outnumber the providers (taxpayers). So instead of cutting spending, which any smart person would do, or creating more taxpayers (jobs) this miserable failure of a President can only do what democrats always do, raise taxes. Remember Socialism only works until you run out of other peoples money. Obama will make us all equal eventually, all broke and hopeless.

tk

Obama won by three and a half million votes, if you want to call that barely.In the electoral votes he won by a landslide. The people have spoken. Give it a rest.

rickross2

We'll see how all this works for you Barry supporters.

the office cat

You need to do some reading - and listening - especially to the rightwing news sources.
EVEN Paul Ryan is backing away from the 'takers' mantra. he even says we need to take care of the Middle Class.
Ruh Roh!!

verdict

When did Paul Ryan ever say that we need to NOT take care of them? I know, I know. Unless it is the Democrat way (socioeconomic collapse), they haven't been "taken care of," right?

Randy_Marsh

Boehner stated and proposed to close the loopholes, Obama does not care except to parade around the fact that the rich are being taxed more. The Rich on the other hand have lawyers to use the loopholes that are still there. Yeah we all know Obama won the presidency, So hold him accountable for his term in office. His proposal is the same one he has already proposed and was turned down by even the democrats. http://www.washingtontimes.com/b... Guess those darn obstructionist killed that bill.

the office cat

Hmmmm. Do you refer to the 'budget' the president submitted, knowing full well it would go down? You must be one of the few who didn't realize it was a hoax.
Sad

goofus

So the president of the united states has time between vacations and golf to make up a "joke" budget????

Randy_Marsh

I am glad you clarified that the budget the senate and the house wasted their time voting on was a presidential "Hoax" Awesome! Now we all know this new proposition that was the same is a "hoax" as well and he is just waiting to pass the limit and blame someone else, But now we know it is a hoax and he is not taking anything seriously it is his fault when we hit the debt limit and get downgraded again and people start getting fired. Good joke, Sort of like his entire administration.

Contango

Put Mr. Obama's intial proposal before the HOR and the Senate:

$1.6 trillion in tax increases up front,

50 billion in additional stimulus spending,

a permanent increase in the federal debt ceiling,

a one-year expansion of jobless benefits,

and an extension of the payroll tax credit,

He may have "won," but it wouldn't pass either house.

Where's the reduction is spending?

2012 - $16T in debt

2016 - $20T in debt.

http://www.cnbc.com/id/50016612/...

U.S. Debt Clock:

http://www.usdebtclock.org/

The Big Dog's back

Let the cliff come! Sock it to the rich! Yeah baby!

the office cat

Point?
And of course, the Debt Ceiling no longer will be in the Congress' province.
Gotta love it!

goofus

Constitution be damned huh catnip!!!!

Randy_Marsh

@Officecat
You really hate that checks and balance thing dont you? That is the reason the rest of us think you are insane and do not have a clue about anything, You want to live in a dictatorship with your lord and savior in charge. Reminds me of one of those brainless national socialist who brought in Der Furher.

kURTje

"Only the little people pay taxes." Leona Helmsley. Wonder how she voted? Or just let US have the same health care Nancy Reagan has, we've worked harder than her.

jon491

Didn't know they could send ballots to HELL.

the office cat

good one!

the office cat

@Kurt... Ignorance is bliss.... so you must be ecstatic!!! Helmsley died in 2007! ...and she's not buried in Chicago!! (had to say it first).
Why not the health care of all those Bushes?

Contango

“Michael Milken, Martha Stewart and Leona Helmsley share something in common besides being convicted felons — they are all Democrats. While their wealth sets them apart from the typical felon, their party registration is the same as most former convicts.”

http://www.newsmeat.com/fec/byst...

http://www.humanevents.com/2007/...

Randy_Marsh

Its always funny that the liberals will scream about the rich paying more, Yet continue to re-elect rich guys who havent paid taxes. Take for example Charlie Rangle, They keep electing him but want to hold everyone else to the flames. http://online.wsj.com/article/SB...

The Big Dog's back

Bernie Madoff, Jack Abramhoff, Dennis Kozlowski, G. Gordon Liddy, H.R. Halderman, and thousands more all have one thing in common. All Repubs? All jailbirds.

Randy_Marsh

If they were democrats they would be in the Admin by now huh?

Contango

"Bernard L. Madoff Investment Securities, gave $372,100 in campaign contributions since 1991, with 89 percent to Democrats."

http://www.opensecrets.org/news/...

the office cat

hmmmm. Leona's dead (and gave her dog $12 million - dog is dead too) since 2007.
Milken has been 'dead' since 1993 of terminal cancer but jsut refuses to lie down.
Stewart did her time for the same thing several GOPs did who continued serving in Congress - and she's bigger than ever.
Point?

Randy_Marsh

Do you mourn for a fellow democrat office cat?

2cents

(The charming woman with the dazzling and cute smile–Debbie Wasserman Schultz–recently attacked Mitt Romney for outsourcing jobs during his tenure at Bain and for investments he has made overseas, going so far as to say it would be nice if he was “committed to America.”

This of course is part of the left’s plan of dividing Americans along class lines to hold onto power–the age old proletariat versus the bourgeoise plan which has been implemented with great success (for the ruling class, those who were the ruled didn’t make out so well) in Europe in the past.

Here is what Schultz had to say about Mitt Romney:)

http://americaswatchtower.com/20...

donutshopguy

This fiscal cliff nonsense has got to stop. The amount of money they are talking about won't run the government for a week. This is more of a fiscal bump.

There is a fiscal cliff but this is just smoke and mirrors by Washington.

Contango

It won't be long before $100M annualized income will be the new $250K.

Soc. Security contributions, the Federal income tax and AMT all started out as taxes only for the rich.

It's gotta trickle down to the middle class, 'cause they're the biggest group of wage earners.

Like rats climbing over one another trying to get off a sinking ship wherein they all ultimately drown.

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