Jumping off the cliff, or pushed off the cliff


So the world didn’t end on the 21st, but if one listens to the scary sounding ‘fiscal cliff’ new reports, then you might be forgiven for thinking that the world might end on the 31st anyways. This is hardly a perfectly accurate depiction, although there will most certainly be serious repercussions of going off the cliff. More interesting are the ‘ongoing’ negotiations in Washington to attempt to find a solution. Long framed as an Obama vs. Boehner battle, I say the ‘negotiations are ‘ongoing’ because they are hardly happening, especially with the holiday season.

Obama’s key demand, and perhaps the biggest sticking point, is his demand for a higher tax-rate on the rich. Republicans traditionally baulk at anything that looks remotely like a tax increase; a trend certainly prolonged by Grover Norquist. This made it a pleasant surprise when Boehner tentatively agreed to higher tax rates, giving up the common position of only making the rich payer more taxes through closing tax loopholes.

Source: Huffington Post

Hoping to strengthen his negotiating hand, Boehner tried to pass his now infamous ‘Plan B’, which would raise taxes only those with an income of 1 million or more. Obama’s definition of the ‘rich’ was considerably broader and approval of his Plan B might have made it easier to push for the level to be set at 1 million rather than £250,000. Sadly for Boehner, his Plan B failed horrible, imploding in his face like an egg in a microwave. Republican votes failed to materialise, doing the very opposite by highlighting his weaknesses rather than his support. Read about how it all unfolded.

Now negotiations are on ice as the respective players head off on holiday. So what’s next?

Most media reports suggest that Boehner’s lack of support might make things easier for Obama. Boehner seems to lack support even within his caucus, again raising the question that arose the last time the ‘Grand Bargain’ was discussed: whether Boehner can deliver the votes. What’s more, a lack of Republican support would mean that Obama’s positions are strengthened by their ability to deliver Democratic votes.

On the one hand, the clear showing against a higher tax-rate could make it easier for Boehner to extract concessions out of Obama. After all, with a Republican controlled House, even a very obedient group of Democratic representatives would be insufficient to pass a bill. So any solution would require Republican votes, something that only Boehner can deliver.

In both instances, the question depends on how close both sides are willing to risk jumping over the cliff. Whoever’s more willing to risk the fiscal cliff would be less likely to change their position for a solution. I think Boehner’s likely to blink first. Most polls show that voters would blame Republicans for a failed deal. Jumping off the cliff would have greater consequences for Boehner.

What if he did cut a deal with the Democrats? Although some Republican votes would be required and probably present, it is highly likely that a large number of Republicans would baulk at the final deal. After all, if they couldn’t support Plan B, what makes them willing to support a less Republican-esque final deal?

Some suggested that Boehner would be pushed out of the Speaker-ship. I think that seems rather extreme, especially given the lack of a true challenger who might be able to get the votes required. It might make for interesting news reports to suggest Boehner might no longer be the speaker, but it is unlikely to actually happen.

That’s not to say there wouldn’t be a political cost to Boehner. Unless the final vote can be seen as a collective Republican choice with a significant portion of Republicans voting for the deal, Boehner is likely to be framed as the lone wolf, acting in cohort with the Democrats. Though that won’t put his position at risk, it’s likely to extract a personal cost both in negative perceptions and opinions.

Whether Boehner chooses to jump off the fiscal cliff without a deal, or risk getting pushed off the cliff by cutting a much needed deal, I don’t envy him.

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