President Obama may want to go over the 'fiscal cliff'

ADVERTISEMENT
By going over the cliff and allowing the tax cuts to expire and the spending cuts to go into effect, Obama could maneuver himself into position to get what the House Republican majority now prevents him from achieving. Income tax rates on everyone would automatically go back up to where they were before George W. Bush lowered them. The death tax would go back to a higher rate, as would the taxes on capital gains and dividends. Defense spending would be cut to what many experts call dangerously low levels.
 
These are all things for which Obama has argued. These are all things Obama wants. And the fiscal cliff, rather than being a disaster for his presidency, would simply set the stage to get him where he wants to go. Moreover, according to most of the available polling data, it is the Republicans who will get the blame for it because they stubbornly refuse to vote for any higher taxes.
 
Once all the new higher tax rates are in place, Obama can pick and choose what he wants to do. To address the concerns of the middle class, he can propose a “middle class tax cut” that would restore the lower rates to those below a certain threshold, while leaving those above it at the then-restored higher rate. What then are the Republicans to do? Vote against a middle class tax cut benefitting 98% of taxpayers simply because the wealthiest 2 percent are not included? That would be political suicide.
 
Another “vote winner” for Democrats would be to restore the two percent reduction in the payroll tax that is also set to expire. Bringing the employee side of the Social Security tax payment back down to 4.2 percent would be popular with voters even though it actually makes the long term debt problem worse by reducing the flow of funds into the Social Security Trust Fund and advancing the day it goes bankrupt.  What would the right response to that be, other than to go along with it? Voting “No,” as many in the GOP might want to do, would put them on the wrong side of a tax cut for the working class a second time.
 
On the spending side, once the sequester is in place, Obama can again pick and choose the programs to which he would like to restore funding. The GOP may have a better advantage here – the public still has a very low tolerance for wasteful spending – but whatever Obama suggests will doubtless be married to real repairs to an otherwise eviscerated defense budget. So the Republicans will have a choice: go along with the whole package or leave the Pentagon dangerously underfunded.
 
So President Obama may secretly want the nation to go over the fiscal cliff. It would put him in the driver’s seat. It may not be good for the country but it could be politically good for him, and that may have the higher appeal. Republicans in both the House and Senate would do well to think about this and plan a few moves ahead on the Congressional chessboard.
 
Hanna is president of Let Freedom Ring, a public policy advocacy group based in Pennsylvania.