In remarks to reporters last week, President Barack Obama took a firm stance – with a hint of some future flexibility – on fiscal cliff negotiations with Republicans. The president’s aggressive tone is unsurprising, and perhaps justified, given his election win. But the debt crisis demands that he save some of that sternness for his party, too.
Obama made it clear Wednesday – and reiterated Friday – what he won’t accept as Democrats and Republicans craft a deal to avoid the impending cliff. He’s also spelled out the order in which he’d like to see tasks accomplished. First, he wants Congress to pass an extension of the Bush tax cuts for Americans making less than $250,000. Wealthier Americans would get tax relief on the first $250,000 they make, but tax cuts for anything above that would be left to expire.
When that’s done, Obama says, he’ll be ready to talk about broadly tackling the debt. The president has long said he prefers a balanced approach that includes spending cuts and revenue increases. He said Wednesday he’s also open to Republican ideas that focus on closing loopholes and limiting tax deductions to gain revenue (in a White House meeting Friday, Republican leaders proposed a debt-reducing framework that included a non-specific nod at revenues). But Obama doubts that such a strategy could make up for the $1 trillion it would cost to extend tax cuts to the wealthy. “The math tends not to work,” he said, chidingly.
Still, there’s room for compromise. Democrats have shown some interest in a concept proposed during the campaign by Mitt Romney that would cap tax deductions at a certain amount, instead of eliminating specific deductions. Obama also could consider raising the threshold for Bush tax cuts to $500,000 or more – an acknowledgment that raising taxes carries some danger in a fragile economy.
The president certainly has Americans on his side on taxes. Voters forcefully said before the election and in election day exit polls that they favor having the rich contribute more. But Americans also have said they want spending cuts and entitlement reform. Social Security, Medicare and Medicaid account for more than 10 percent of gross domestic product, nearly as much as defense spending and all other non-interest federal spending combined. Economists say the Big Three entitlements will soon pass the rest as a percentage of GDP, if current policies continue. That’s unsustainable.
Democrats, however, already suggested last week that Obama leave entitlements alone and concentrate on reducing the debt through defense cuts and tax increases. The math doesn’t smile on that approach, either, but Democrats clearly are emboldened by a strong election night.
They shouldn’t be. Election winners – both individuals and parties – often imagine a position of strength voters didn’t really give them. That would be especially true with this election, which was an electoral romp but a popular vote squeaker.
It’s encouraging that Obama also acknowledged the need Wednesday for a “serious look at how we reform our entitlements.” As House Speaker John Boehner said in his own post-election remarks: “We’re ready to be led.” Both Republicans and Democrats are showing us just how much they need it.
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