Monday, November 12, 2012

The Post-Election Scenario Now

Before the election results, there were five scenarios - two for Romney and three for Obama - for how the President / Congress dynamic would look.  With Obama's victory, we're on the fourth one, what is basically the status quo we've had since 2010: Democratic Senate, Republican House, and Obama Democratic Presidency.

What I said then:
The only problem then will be dealing with a Republican House standing as the "last bastion" against an Obama-dominated regime.  If it was a job herding cats before, this will be like working as an alligator teeth puller operating without pliers and standing waist-deep in a swamp.  The fight to get anything resembling a budget will be close to impossible without the wingnut faction in the House getting everything they want (which in a sane world won't happen).  Obama may yet want to finish out a second term where SOMETHING got done for job growth and economic stimulus, but the House will fight that every inch of the way.  And some legislation HAS to start in the House, not the Senate.  Meaning something approaching compromise has to be done... and Lord knows what Obama may have to give up in order to get a jobs bill passed...

Is pretty much how the post-election dynamic is lining up with the early positioning on the lame-duck Congressional session to finalize a budget deal.

It's the Fiscal Cliff scenario: a combination of deals and laws are intersecting this winter that would pack a one-two whammy on the U.S. economy if Congress refuses to act.  The Bush the Lesser tax cuts of 2001-03 are set to expire, which would raise everyone's tax rates not to historic highs but to Clinton-era (i.e., manageable) rates.  There's the Sequester deal made last year, where automatic spending cuts in ALL government programs - including defense/military, AND social programs - will kick in alongside more tax increases when 2013 calendar rolls up.  The sequestration isn't a bad deal overall: it's that the cuts will be akin to using a sledgehammer during surgery where a knife would be more apt.

Separately, either situation wouldn't be too harsh: together, the bump up in tax hikes and severe spending cuts can very well lead to another deep recession at a time where the U.S. economy is still crawling out of the last one.  It's a Double-Dip Recession we're facing, and it definitely has global economic consequences that wouldn't get resolved for another decade...

Thing is, a new bill out of Congress can kick both deadlines to the curb by overriding the sequestration and by re-working the Bush-era cuts into a more manageable tax hike.  So before December 31st rolls around, there are a good number of politicians in both the White House and Congress who want to get a deal done.

Problem is, on whose terms?

Obama wants to re-work the sequestration to reduce the amount of spending cuts to a more manageable level and combine it with returning the tax rates of the upper 2 percent of income to their Clinton-era levels.  The House Republicans would prefer keeping the spending cuts on all social programs, ignore cuts to defense spending, and keep the Bush-era cuts permanent if they could.

Worse of all, the Republican Party overall is reeling right now: their leadership AND voting base were so certain of a Romney victory - and some even thought they would gain control of the Senate - that their loss last Tuesday night really kicked their guts in.  All that hate and vitriol they spilled in Obama's direction, and still they lost.

The Republican Party hate-on for Obama is at unheard of levels: I remember the Republicans' disdain for Bill Clinton with all its conspiracy-laden what-the-hell alternate reality of America, and even THAT was mild compared to what they're hitting Obama with.  The closest historical I can think of is the hate-on the fiscal leaders of the GOP had towards FDR.

This is a party that has planned to obstruct Obama and his agenda - decried as socialist, un-American, anti-business - from Day One of his administration.  The use of Cloture and threat of filibuster has more than doubled.  Once the Republicans gained control of the House during the 2010 midterms based on paranoid-hate-fueled outrage, the House proceeded to ignore every Democratic attempt at a jobs stimulus bill and instead spent 31 useless votes on trying to overturn ObamaCare.  The Republicans have spent four years in an open attempt to make Obama a "failed" President akin to Jimmy Carter ("history's greatest monster!") and make Obama a One-Termer.  And they failed.

This does not mean the Republicans will give up the obstructionism.  They can well double-down on the obstruction.  They are still convinced that Obama is a failure: and they want history to reflect that belief.  They are NOT going to give Obama anything he wants.  I don't mean everything Obama wants: anything, at all.

That means if Obama comes calling with a deal on sequestration and ending the Bush-era tax cuts on just the upper 2 percent incomes, the House Republicans may well say NO in large unfriendly letters.  There may well be enough Republicans who will refuse to deal on anything and even allow the deadlines to pass, enacting that dreaded fiscal cliff.

Problem is what can happen: Obama can well live with Congress taking the country over the fiscal cliff.

Previous times negotiations had to happen to get budgets done, Obama was not in a position to negotiate much.  Facing re-election, he didn't want to overstep or fall into any traps the GOP may have laid out against him.  This time, however, Obama has little to lose: he's won re-election, he's got four more years to get something done with the economy and job woes.  And despite all protestations from the Far Right, Obama does have a mandate: the polling and the votes have shown that a solid majority of Americans back Obama on his plan to raise tax rates on the uber-rich.

It's the tax hikes that are the obvious sticking point for the Republicans.  They'll refuse to actively vote for any deal that raises them (the "no new taxes" pledge to Norquist overrides any obligation to the nation as a whole with these guys).  All Obama has to do, really, is let the Bush-era tax cuts expire, raising all taxes regardless.  And then the day after that, come back to Congress with deal to cut taxes back down close to Bush-era levels... with the exception of the upper 2 percenters.  This will catch the Republicans in a lose-lose situation: they'll be presented with a tax cut they CAN vote for which would be clearly for the middle-classes, but will give Obama a political victory they dare not allow... or they can vote against it on the excuse that the upper-classes need a tax cut as well, which is political poison in this economy and re-enforces the image of the Republicans as greedhead suck-ups to the billionaires.

As a result, there are some Republicans who see the benefit of getting a deal done now and make it look bipartisan in nature, giving them some of the credit... or they can obstruct some more, get caught with their pants around their ankles, and let all the credit go to Obama or all them blame to the House GOP.

It's all up the House Republicans right now: how they'll handle themselves this lame-duck session before 2013.  We'll see then if we'll have a working government or another round of Republican-led gridlock.  We'll see...

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