Neither side wants a deal

Obama thinks he'll make fewer concessions after Jan. 1 with a new Senate. And GOP leaders want to look tough

By Steve Kornacki
December 28, 2012 6:24PM (UTC)
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(AP/Carolyn Kaster)

It’s unclear whether today’s eleventh-hour fiscal cliff summit at the White House represents a good faith effort to broker a deal or if it’s just for a show -- a way for one or both sides to pretend they were doing their best to resolve the impasse right up until the January 1 deadline.

The reality, though, is that it’s probably in both parties’ interest for no deal to emerge from today’s session.


Look at this this way: President Obama has made raising tax rates on high-income Americans his bottom-line demand. He campaigned on it and he won, and the scheduled expiration of all of the Bush tax rates on January 1 gives him added leverage. He initially set the tax hike threshold at $250,000, but in his most recent offer to Republicans, he bumped it up to $400,000 -- in addition to surrendering on a payroll tax extension, accepting a form of chained-CPI for Social Security (essentially, a benefits reduction), reducing his overall demand for new revenue by $400 billion and agreeing to $400 billion in unspecified healthcare (read: Medicare and Medicaid) savings.

This was enough to unsettle Obama’s base, which wondered if the president was giving away too much relative to his bargaining position, but it wasn’t enough to win over Republicans. Presented with Obama’s offer, House Speaker John Boehner thumbed his nose at it and instead proposed a simple extension of the Bush rates for all income under $1,000,000 -- then watched as his own conference refused to provide him with the votes needed to pass it.

Since that debacle, the spotlight has shifted to the Senate, with Republicans demanding that Harry Reid and Democrats offer a plan of their own. Reid has countered that they already did -- a bill to extend the Bush rates on income under $250,000, which passed the Senate months ago. The latest indications are that Senate Minority Leader Mitch McConnell is now negotiating with the White House.


This is roughly where things stand now. It’s possible that the McConnell-White House talks will yield a last-minute bill that passes the Senate and that could pass the House -- if Boehner were to allow it to come to the floor. And if, somehow, McConnell essentially accepts what Obama laid out in his most recent offer (and if, somehow, Boehner were to bring this to the floor), then it would make sense for Obama to cut a deal right now. But it’s hard to see McConnell striking a deal on those terms and harder still to see Boehner going along with it.

McConnell has to worry about a primary challenge from his right in 2014 -- the kind of Tea Party uprising that allowed Rand Paul to topple his home state protégé two years ago. If he’s seen as caving to Obama right now, it could imperil him in ’14; he’d need to make it look like he’s extracted even more concessions from the White House -- which would mean Obama will probably have to give more ground.

Tea Party fear is event stronger on the House side, where Boehner could theoretically be toppled as Speaker next week if a relative handful of conservative Republicans simply decide to vote “present.” More to the point, the House GOP conference is split between true believer conservatives, many of whom remain absolutely committed to the anti-tax absolutism that has defined the party for 22 years, and those who live in fear of Tea Party primary challenges (and thus don’t want to be seen as selling out conservative principles and making a deal with Democrats).


Given the realities of today’s Republican politics, it probably makes more sense for McConnell and Boehner to wait until after January 1. They’d be able to tell conservatives they held out until the end, and then -- with all of the Bush rates vanishing -- they wouldn’t be accused of ideological treason for allowing a vote to (say) reinstate the Bush rates on income under $250,000. After January 1, any deal on taxes will be a tax cut. Yes, this is all a bit silly, but this timing seems to matter greatly to Republicans.

This is why Obama’s best bet is probably to wait a week or two, as well. A new, more liberal Senate and House will be seated in early January, and many of the concessions that he’d have to make to strike a deal now won’t be necessary. Instead of settling for a $400,000 threshold on taxes (or even higher), Obama could potentially revert to his $250,000 demand and still win.


The down-side to waiting for Obama would be that other items on his wish list would be jeopardized. He could probably get the unemployment benefits extension that he’s seeking even after January 1, but the modest stimulus spending he’s now asking for could be a different story. Ditto for an extension of the debt ceiling. There’s also the payroll tax holiday, due to expire on the first, but it seems as if that’s going away no matter what.

But this has to be balanced against what extra concessions Republicans might demand for a pre-January 1 deal. Maybe the GOP really is getting cold feet about going over the cliff and a plan more to Obama’s liking will emerge from today’s session. But it’s hard to see that happening, especially when Republicans know they can vote for a tax cut next week. In terms of what really matters to them, it might be best for both sides to just wait another week or two.

Steve Kornacki

Steve Kornacki is an MSNBC host and political correspondent. Previously, he hosted “Up with Steve Kornacki” on Saturday and Sunday 8-10 a.m. ET and was a co-host on MSNBC’s ensemble show “The Cycle.” He has written for the New York Observer, covered Congress for Roll Call, and was the politics editor for Salon. His book, which focuses on the political history of the 1990s, is due out in 2017.

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