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."
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