In the weeks since his
victory, President Barack Obama has argued -- correctly -- that voters
are demanding that high-income Americans pay higher taxes as a way to
reduce deficits. Some 60% in exit polls endorsed that proposition, and a
Pew/Washington Post poll released this week found that 60% still
support it. The president, then, has good reason to push the idea.
In a breakthrough, House
Speaker John Boehner quickly lined up behind the idea of the wealthy
paying more. He still disagrees with the president on how to get there,
of course, but critics are losing sight of how far Boehner seems
prepared to go. In private negotiations with Obama last year, the two
men first agreed on raising $800 billion in new taxes over 10 years.
When Obama pushed to see whether Boehner would go up another $400
billion to $1.2 trillion, the talks fell apart amid bitter
recriminations and conflicting accounts of what happened.
Obama has now doubled the
ante, asking for a total of $1.6 trillion in higher revenues over 10
years. Even though that is twice the revenues discussed last year,
Boehner hasn't walked away.
He hasn't even blinked.
Instead, word seeps out from Republican ranks that his members are
asking to keep the final figure under $1 trillion even as others in
Washington speculate that a compromise may be struck at halfway between
$800 billion and $1.6 trillion, at $1.2 trillion.
Last summer, that would
have been considered a huge victory for Democrats. Remember that
Republicans haven't voted for significant tax increases since 1990 -- 22
years ago. To get them to the point where they seem prepared to accept
as much as $100 billion a year in new taxes, aimed at the affluent, is
remarkable.
There are at least two
sticking points. Obama has insisted that the first new revenues come
from raising tax rates on couples who earn above $250,000; Boehner has
insisted that, no, they should come from limiting personal deductions
and closing loopholes. Democrats like Sen. Harry Reid say the
deduction/loophole route won't yield enough revenue. The Washington Post
editorial page argues that in fact, limiting deductions to $50,000
per taxpayer would raise about $750 billion over 10 years, nearly
matching the $800 billion that would be raised through the proposed tax
hikes on the top 2%.
In Washington of yore,
when leaders sat down and negotiated face to face, those differences
would seem highly bridgeable. Get part of the revenue by raising rates
slightly (not all the way), and get the rest through
deductions/loopholes. Both sides get some of what they want.
The other sticking point
is that Republicans insist now that, as Obama would put it, the final
grand bargain must be balanced. Big tax increases and big spending cuts
must be voted on together so both sides are guaranteed concessions by
the other.
That, too, seems highly
doable: In the negotiations last summer, Obama's team (see Bob
Woodward's new book) put a number of significant entitlement reforms on
the table, including Medicare, Medicaid and Social Security. Republicans
are insisting that before they sign on any dotted line about higher
taxes, Obama and the Democrats show what entitlement reforms they are
willing to embrace. Frankly, that sounds entirely reasonable: It has
been clear since Simpson-Bowles and numerous other efforts that big
concessions must come from both parties.
In short, we have known
the framework of a grand bargain for a long time, and in theory, we
should be closer to it than ever. But this week, there is a palpable
sense in Washington that the parties are drifting apart and chances of
an agreement before Christmas are diminishing. Erskine Bowles, a former
White House chief of staff and former co-chairman of Obama's debt
commission, now puts the chances of a deal that prevents us from going
over the fiscal cliff at only one in three.
Why has a grand bargain
become so much harder than it should be? Last year, it was clearly the
Republicans who were over-playing their hands, being obstinate when they
should have been more flexible. (The deal they could have gotten then
would have been considerably better than the one they are looking at
now.) But frankly, it is the president and the Democrats who are
over-playing their hands now.
Instead of turning the
GOP willingness to deal on taxes into a win-win, the White House
seemingly wants to humiliate them by insisting they cave entirely on
increasing tax rates -- or take responsibility for going over the cliff.
Instead of sitting down and negotiating directly with leaders from the
other side in private getaways, as presidents like Lyndon Johnson and
Ronald Reagan did, the president launches a campaign-style offensive
against them.
The proposal that
Treasury Secretary Timothy Geithner put before Republicans on Thursday,
as reported by The New York Times, was clearly intended to score
political points with Democrats rather than entice Republicans into
serious negotiations. It was full of nonstarters. One example: It
demanded that Republicans lock in to $1.6 trillion of higher taxes in
December and in exchange said that spending cuts one-quarter that size
would be the subject of talks next year. Come again?
What we are seeing, I
regret to say, looks very much like a movie we have seen before: The
side that wins an election thinks the public has given them permission
to steamroll the other side, pushing through their favorite ideas
willy-nilly. Sometimes, they partially succeed, but before long, there
is a backlash, and Washington comes to another grinding halt.
We saw that back in the
early '90s, when first the Clinton White House overreached, going too
far left, and then after winning the midterms, the Gingrich Republicans
overreached to the right. In the second Clinton term, they learned how
to get along better and accomplished big things for the country.
The same story unfolded
over the past four years as the Obama White House went beyond public
tolerance in its first two years, and then Republicans, resurgent after
the midterms, struck many voters as so obstructionist that they paid a
price in this fall's elections.
Now, along comes a newly
victorious Obama White House, and it is showing clear signs that it
wants to test its new powers to their limit -- and, in Republican eyes,
well beyond their limit.
Many Democrats are
jubilant because they thought that in his first term Obama was a
milquetoast in dealing with Republicans -- he was always giving away too
much too soon, negotiating with himself.
But there is now a
danger of over learning that lesson, becoming so combative and rigid
that good faith negotiations become almost impossible. Old White House
hands from the GOP side -- people who like our Presidents to succeed
--are privately warning that if the White House and allied Democrats
keep pushing so hard-fisted on deficits, Susan Rice and Senate
filibuster rules, relations with Republicans on the Hill will become
even more poisonous in the next four years than in the past.
Again, Obama is right
when he argues that the voters have spoken: A majority clearly believes
that in closing the deficits, taxes should go up on more affluent
Americans. It is time. But he will be more successful in his second term
if he takes guidance from how presidents like LBJ, Reagan and Clinton
negotiated with congressional opponents -- and takes a night off to see
"Lincoln."
Read the full story here.
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