White House, congressional GOP head toward cliff deal

theGRIO REPORT - Urged by many liberals to go over the so-called fiscal cliff and force Republicans to accept whatever deal he offers, while centrists and Republicans say he must lead Washington to a compromise, President Obama is instead pursuing both options...

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President Obama said an agreement is  “within sight” on resolving the so-called fiscal cliff, as more details have emerged on the outlines of a likely agreement.

Congressional sources have told NBC the final agreement will raise taxes on individual income over $400,000 and for couples over $450,00, provide additional unemployment benefits for about two million Americans and increase the tax rate on inherited estates from 35 to 40 percent. It remains unclear what will happen to about $110 billion in spending cuts that are scheduled to occur over the next year.

Some liberals are angry Obama moved off of his insistence on raising taxes on income above $250,00, while some Republicans don’t back any tax increases, so it remains unclear if the agreement reached between Vice-President Biden and Senate Republican Leader Mitch McConnell (R-KY) will be approved in Congress. But it likely to gain enough support from Democrats and Republicans to be passed.

Obama, in a White House speech on Monday, tried to assuage liberals by promising he would push for tax increases next year as well, when Republicans are expected to push for spending cuts as part of increasing the federal debt limit.

“If Republicans think that I will finish the job of deficit reduction through spending cuts alone ….they’ve got another thing coming,” Obama said.

But the drama remains on Capitol Hill and at the White House.

Urged by many liberals to go over the so-called fiscal cliff and force Republicans to accept whatever deal he offers, while centrists and Republicans say he must lead Washington to a compromise, President Obama is instead pursuing both options: offering Republicans a deal and at the same time preparing to directly and frontally blame the GOP if no agreement is reached by the end of today.

During fights over the debt ceiling and the funding of the government in 2011, it was clear to everyone that Obama wanted to reach a compromise as much as anyone in Washington, weakening his power to negotiate with congressional Republicans.

Now, Obama still wants a deal before $500 billion in tax and spending cuts over the next year take effect starting on Jan 1., but he is laying the groundwork for something else: rejecting a potential agreement  that is too far to the political right and then taking on the Republicans in a public relations battle over who to blame if the nation goes over the fiscal cliff.

And unlike in 2011, when he constantly blamed “Congress” as if Democrats and Republicans were equally the problem, Obama now seems determined to make clear to the public congressional Republicans are the cause of the dysfunction in Washington.

“It’s been very hard for Speaker Boehner and Republican Leader McConnell to accept the fact that taxes on the wealthiest Americans should go up a little bit– as part of an overall deficit reduction package,” Obama said in an interview on NBC’s Meet the Press.

He added, “Certain factions inside the Republican Party have gone where they– they can’t even accept what used to be considered centrist, mainstream positions on these issues.”

Even if no agreement is reached on Monday or Tuesday, one could still easily be reached by the end of the week, although both parties are worried about the possible impact on the financial markets. Politically, once the tax rates go up for everyone, it will be easier then to pass a bill that simply cuts rates for middle-income Americans.  Republicans would not have to vote for a tax increase, as under the scenario if a vote is held today.

But Obama is trying to avoid that potential market calamity while also using his reelection victory as cudgel to bludgeon through his ideas.  Throughout the last two months of this impasse, Obama has remained firmly committed to a substantial tax increase on upper-income Americans, one that would bring in close to $1 trillion in new tax revenues over the next decade. Obama insisted on raising tax rates on family income above $250,000 at the beginning of negotiations. He has signaled flexibility on that precise number, but not on his core idea: that tax rates must increase substantially on upper-income Americans. He has rejected Republican proposals to focus instead on spending cuts, or simply cut loopholes from the tax code instead of increasing the top tax rates for upper-income people.

And the outlines of the final deal emerging now don’t  include a reduction to future Social Security benefits that Republicans have pushed for and that President Obama has suggested he could support as part of a broader agreement. Additional money for unemployment benefits for about two million Americans, tax increases on the wealthy and almost no additional spending cuts, the core outlines of this agreement, are all opposed by some congressional Republicans.

But some liberals are upset that Obama has even considered a compromise at all with weakened Republicans, arguing the president’s offer as part of a compromise to start new tax rates at $400,000 of income goes too far to accommodate the GOP. And they argue by going over the cliff, he would increase his power in a negotiation, as polls suggest Americans will blame Republicans, not Obama for any resulting problems.

“The tax cuts are the one area where he enjoys overwhelming leverage over the Republicans. Their only threat is to block extension of tax cuts on income under $250,000, a wildly unpopular stance countless Republicans have acknowledged they could not sustain for long without courting an enormous public backlash. This is the hand where Obama needed to collect all the chips. Instead he is allowing Republicans to whittle down the sum,” wrote New York magazine’s Jonathan Chait early Monday.

This liberal criticism is not surprising. Obama still wants to govern from close to the political center. He told NBC’s David Gregory that he considers his proposals of most issues akin to that of a “pretty mainstream Republican agenda,” arguing they should find bi-partisan support. (In reality, the Tea Party and other very conservative voices have shifted the center of the GOP to the political right, so many members would likely face primary challenges if they adopted Obama’s proposals.)

And in reality, Obama must get some conservative support for any idea he wants to get through the GOP-controlled House.

But the president’s approach in this fiscal cliff deal suggests he will handle the next coming deadline, the one on the national debt limit, differently than in 2011. Back then, the president had perhaps the most to lose if the nation went over debt ceiling, in terms of how it would affect the both economy and his reelection prospects.

Now, Obama is bluntly declaring the debt ceiling should be raised without any negotiation, as has been the course for decades. Republicans are very unlikely to simply accept an increase without trying to cut spending, as the debt ceiling is a powerful bargaining chip for them. But Obama sounds like he will again negotiate with a very firm starting position while also looking for a compromise.

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