Obama’s Desperate Measure—A Fiscal Cliff ‘Plan B’
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By Josh Boak,
The Fiscal Times
December 28, 2012

With the nation on the verge of stumbling off the fiscal cliff, President Obama sounded desperate Friday as he reeled off his expectation that lawmakers would at least hold a vote to avert the punishing combination of automatic tax hikes and spending cuts slated for next year.

Closed-door negotiations, polite phone calls, and curt press conference have done little to forge a deal thus far. For the better part of a year, lawmakers knew that—without evasive action—2013 would start with paralyzing changes to the federal budget that would throw the economy into recession.

Obama claimed to be “modestly optimistic” that a deal could still be struck. He is banking on Senate Majority Leader Harry Reid, D-Nev., and his Republican counterpart, Mitch McConnell of Kentucky, reaching some kind of agreement in the next few days—after which the cliff becomes reality. Should those last-ditch talks fail, the president said he expects each member of the Senate and House to go on-record with a simple vote.

“If an agreement isn’t reached in time between Senator Reid and Senator McConnell, then I will urge Senator Reid to bring to the floor a basic package for an up or down vote—one that protects the middle class from an income tax hike, extends the lifeline of unemployment insurance to 2 million Americans looking for a job and lays the groundwork for future economic growth and deficit reduction,” Obama said at the White House press briefing. “I believe such a proposal could pass both houses with bipartisan majorities as long as those leaders actually allow it to come to a vote.”

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But the president added ominously, "If members of the House or Senate want to vote no, they can."  His statements suggested that the core obstacle to a deal has been partisan leadership, rather than the members themselves. The drama in recent weeks indicates otherwise.

House Speaker John Boehner, R-Ohio, pulled from a floor vote his own “Plan B” that avoided the crisis in part through a tax rate increase on incomes above $1 million. Boehner lacked the 217 votes within his own caucus that were needed for passage, and placed the burden of addressing the cliff on the shoulders of the Senate.

Elevated into the national spotlight, McConnell said Friday, “We’ll be working hard in the next 24 hours to see if we can get there, so I’m hopeful and optimistic.” Yet that optimism depends on breakthroughs that remain unseen.

Congressional Republicans have refused to extend the expiring low tax rates for 98 percent of the country as Obama requested. They insisted a top 39.6 percent rate on incomes above $250,000—and later $400,000 and later $1 million—would mow down job creation. Obama has yet to retreat on his demand for a rate increase.

And Democratic lawmakers never yielded on the structural changes to entitlement programs such as Medicare that the GOP requested. Wary of the health care spending that is set to explode to dangerously high levels, they demanded any deal contain an equal amount of spending cuts over the next decade for each dollar of new revenues. Obama agreed to a less generous measure of inflation for Medicare and Social Security beneficiaries, but it wasn’t enough to satisfy Boehner.

Time is now preciously short and easily squandered. The Senate reconvened on Thursday and the House is scheduled to do so on Sunday. Without an agreement by Tuesday, the drop off the fiscal cliff starts. Emergency measures can buy a few weeks’ time to hammer out a compromise, but the president’s own economics team has worried about the psychological impact on the markets and consumers.

Obama tried to appeal to popular sentiment on Friday. He entered the week with a 57 percent approval rating, but that has slipped to 53 percent in the days that followed, according to the Gallup Organization.

The president—left with no argument to sway the contentious lawmakers—was reduced to making an almost paternalistic demand. He noted that voters are outraged by the situation, yet the dysfunction continues. Obama has made similar claims before, only to have them bounce off the tin ears in Capitol Hill.

“Outside of Washington, nobody understands how it is that this seems to be a repeat pattern over and over again,” the president said. “Ordinary folks—they do their jobs.  They meet deadlines.   They sit down and discuss things and things happen.  If there are disagreements they sort through the disagreements.  The notion that our elected leadership can’t do the same thing is mind-boggling to them. It needs to stop.”