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Süddeutsche Zeitung, Germany

And the Winner Is: Obiden

By Reymer Klüver

Translated By Ron Argentati

2 January 2013

Edited by Ketu­rah Hetrick

Germany - Süddeutsche Zeitung - Original Article (German)

Peace finally comes to the fiscal cliff, at least temporarily. Congress struck a New Year’s Eve compromise in the fiscal debate, and Obama can resume his vacation in Hawaii. He and his vice president leave the debate stage as winners, and the average American also shares in the victory. The losers: millionaires and the Tea Party “radicalinskis.”

The decision came down two hours into the New Year: Senate approval of the compromise was followed by House approval. The fall off the “fiscal cliff” has been avoided, at least for now. The dreaded tax increases are on hold. Does this mean everything is OK? No—just two months from now, negotiations will start anew, so the only people in Washington who can celebrate are those who emerged from the debate victorious.

Winner: Joe Biden

He was the hero of the negotiations. His last-minute involvement literally prevented America's plunge off the fiscal cliff. At least, that's how it looked. Joe Biden personally went to Capitol Hill on New Year’s Eve. After long, tense minutes of waiting, he emerged from the Senate chambers grinning broadly and giving a “double thumbs up” gesture. It was obvious that he, and only he, had gotten it all straightened out and that without Biden's dealmaking, the brawling Senators would not have reached an agreement. He was fortunate that his negotiations were with Senate Minority Leader Mitch McConnell, a figure he had known for years when they were Senate colleagues. Although they do not especially like one another, they hold each other in high regard.

Winner: Mitch McConnell

The Republican's lead man in the Senate is not a man of many words or broad gestures. McConnell prefers to work in the background, and that's the way it was in the fiscal cliff debate. He let others, including House colleague John Boehner, fight the initial skirmishes. After Boehner thoroughly embarrassed himself, McConnell took over.

As an old hand in Washington politics, McConnell knows that when agreement is impossible, there is only one solution: Postpone the fight. This is the strategy McConnell used. Where Republicans had already lost the battle over tax increases on the rich, he gritted his teeth and backed down. Otherwise, he did not changed positions; he just postponed the tricky debt limit issues to a later date. Those negotiations will begin in late February or early March, and you can count on him not to take a front row seat.

Winner: the Average Joe

The average American is, without a doubt, one of the winners in the Washington haggling. Income tax rates will not rise to the level they were under President Bill Clinton (whose era, by the way, has since come to be regarded as a golden age.) The “average Joe”—what we in Germany call the average consumer—will save money in 2013 as well.

But the celebration is decidedly muted since a payroll tax reduction, which Obama had defended as late as last year, had to be abandoned. Then again, what does that matter if Joe's bottom line is better than it had been?

Winner: Barack Obama

The president has delivered on his popular (and populist) campaign promises—or, at least, some of them. America's super rich again have to pay their fair share of taxes to help lower the budget deficit, although they will be doing so without the help of those making more than $250,000 a year. The limit is currently $400,000 per year for a single taxpayers and $450,000 a year for those filing jointly.

Nevertheless, in all previous face-offs with Republicans over debt, taxes and budget cuts, Obama came out on the losing end. Not this time: After his success at the negotiating table, he and his family can resume their relaxing Hawaiian holiday. Aloha!

Loser: Mitt Romney (and All the Other One-Percenters)

They will all have to pay more this year. The top one percent of American earners won't have a bad year in 2013, but they will have to digest a few setbacks. Those earning more than $400,000 this year ($450,000 for those filing jointly) will be paying more than last year.

Shutout for the Deficit Hawks

The super low capital gains tax rates of the Bush era that Romney was so adept at exploiting are now history. Should there be a death in a super rich family, they will also have to deal with fewer inheritance tax deductions.

Loser: Grover Norquist (and All Other Deficit Hawks)

He is the power behind the Republican throne in Washington. Few Republican congressmen and senators have not signed his tax pledge, formulated by the Americans for Tax Reform organization. In doing so, they have pledged to never, ever raise taxes—and none of them dares to break that pledge.

This all comes about with great hoopla and the blessings of the party bigwigs. Grover Norquist tried to limit the damage by heading up the movement that allowed the congressional deal by explaining that it was a one-time exception he would permit in order to avoid going over the cliff. Chances are, his power has been broken in future dealings.

Loser: Tim Geithner

Obama's secretary of the treasury is clearly a major loser—not politically, but personally. Now, he wants to leave government service to make some money. But Tim Geithner will probably have to stay around for a while, for better or for worse, until the debt ceiling negotiations run their course, as is said to be the promise he made to Obama.

Geithner wanted to address the debt ceiling issue now, as part of the fiscal cliff debate, but the Republicans did not want to play that game. Now, Geithner will probably have to stick around his office, remaining close to the White House until at least March.

Loser: John Boehner

It's not yet clear whether Boehner has really won or lost. That will not be known until Thursday, when the Republicans choose their next House speaker. John Boehner has held that post up to now, and he wants to stay in the job. He has really irritated the right wing of his party, who found him far too compliant in his fiscal cliff dealings with the White House. They might take him to the woodshed for that.

But in one respect, the always-suntanned Boehner has already lost. He wanted to make history by reaching the grand bargain with President Obama for a long-term solution to America's fiscal problems. That hope now remains unfulfilled.



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