Obama Ups Bid as GOP Looks For Way Out of Crisis

Posted: Dec 10, 2012 3:23 PM

It's possible to have a strong hand and still overplay it. As Republicans see things, that's what President Obama is doing in the “fiscal cliff” negotiations.

In private conversation, some in the GOP appear a little sheepish about the fact that they once took the president seriously. Even though he had the upper hand after winning re-election, they thought he genuinely wanted to avoid going over the cliff and would negotiate in good faith. Then Obama sent Treasury Secretary Tim Geithner to Capitol Hill with a thumb-in-the-eye offer, and Republicans got the message.

In subsequent days, Obama has not only flatly rejected a Republican proposal that, unlike Obama's, made concessions on tax revenue. He has also ratcheted up his demands -- he now says there will be no fiscal cliff deal without a deal on the debt ceiling as well, which he has demanded unilateral authority to control. And he has, in public, addressed Republicans as if they were unruly children in need of discipline.

”If Congress in any way suggests that they're going to tie negotiations to debt ceiling votes ...” Obama told the Business Roundtable recently, “I will not play that game. Because we've got to break that habit before it starts.”

After Obama's displays of intransigence, many Republicans are looking for a way out of the situation that doesn't involve good-faith negotiations with the White House. It's not easy.

Of course, some in the GOP want to stand and fight. One senior House Republican told me he did not know how the situation could be resolved, but “what I do know is you can never go wrong standing up for principle and the truth.” Some of them would like to see House Republicans pass a bill extending all the Bush tax cuts and say to the White House: Here's our offer.

Others, however, are looking for a creative way out. Some are focusing on the automatic nature of the coming tax increases. On Jan. 1, if no one does anything, all the Bush tax cuts will expire. Taxes will go up without anyone's vote.

One idea circulating among at least a few Republicans would be for the House to pass one bill extending the Bush tax cuts for all but the highest bracket, and then another bill extending the Bush cuts for the highest bracket alone. Both would pass with Republican support, and both would go on to the Senate. There, majority Democrats would pass the bill for lower-bracket cuts with Republican support and would kill the bill for top-bracket cuts over Republican opposition. Voila -- the tax rate for high earners would go up without GOP votes.

Some Republican lawmakers dismiss the proposal as “too cute.” And others are looking at other solutions. Since GOP opposition to a tax increase on the highest bracket is based in large part on the fact that many small businesses file as individuals and would be hit by a rate hike, some lawmakers are searching for a mechanism that would raise the rate on wealthy tax filers but not on top-bracket filers who have a certain number of employees.

The search for solutions doesn't seem to matter to Obama, who has been reassuring allies on the left that he's not going to back down. Recently Obama called in his supporting team from MSNBC -- Rachel Maddow, Lawrence O'Donnell, Al Sharpton and Ed Schultz -- for a messaging session. They, like others on the left who have spoken to the president, left happy.

Republicans have put together a collection of statements from Democrats who welcome going over the cliff. And they're highlighting the fact that Obama has hardened his position, going from a statement in July 2011 that he wanted more revenue, but it did not necessarily have to come from raising tax rates, to today's feet-in-concrete position. If -- maybe when -- disaster comes, the GOP will make a good case that it was Obama's arrogance and overreach that brought it on.

But that's not much to hold on to, and there's not a lot of optimism in GOP ranks. “There's a growing sense that it is hard to imagine a scenario in which the top rates don't go up somehow,” says a senior Republican Senate aide.

“We're in a tough situation,” says the senior House Republican. “If we could not get a good agreement in 2011, when we had just picked up 63 seats in the House and six in the Senate, how in the heck are we going to get a good deal now?”

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