Obama’s First Hurdle: Taxes

Barack Obama has to find a compromise with Republicans to avoid the fiscal cliff, the automatic increase in taxes and cuts in public spending. But the GOP is already promising a battle.

The reelected president needs to bring home his first win. He’s got to keep the first promise he made to the people who voted for him: higher taxes on the wealthy.

To do it, he’s got to compromise with the Republican Party. That won’t be easy. The specter of last year’s long tug of war is back; that ended up with a substantial defeat for the president in a game of chess with GOP congressional leaders. If Obama doesn’t achieve his purpose, he risks immediately losing the strength and political authority that the election win gave him — and it may be the first sign of a long season of paralyzing guerrilla warfare between the White House and Capitol Hill.

At the same time, Republicans in search of a new identity must properly evaluate whether it’s appropriate to engage in a confrontation with Obama, or if it wouldn’t be better for them to accept mediation to reach one or two important policy objectives they can flaunt in front of voters during the midterm election.

In the first press conference after the elections, Barack Obama was clear. He’s seeking a compromise that allows him to get down, in black and white, an effective and balanced plan to reduce the deficit and public debt. But there’s one point on which the president of the United States is not willing to compromise: No extension of tax relief for the rich is going to be carried on the backs of the American middle class.

It can’t be any other way; Obama based everything, throughout his campaign, on the defense of middle class interests. His proposal to Congress will be clear: Avoiding further cuts in public spending (and assistance programs in particular) would require $1.6 trillion more in tax revenues over the next 10 years, a figure that could be achieved by increasing the tax burden on individuals making over $200,000 a year and families making over $250,000 a year. More taxes for the more well-off.

To create the necessary consensus for his proposal, in recent days, the president has met with unions and heads of numerous multinational companies at the White House, but there haven’t been any Wall Street names among them.

Obama said that if Republicans won’t agree to raise taxes on the wealthy, the fiscal cliff will arrive, and the risk of a new recession will be more concrete. “We mustn’t hurt our economy and we mustn’t make the creation of jobs more difficult by increasing taxes on the wealthy,” replied the Speaker of the House John Boehner.*

The tug of war has just begun.

*Editor’s note: Quote not verified in English. Boehner did say: “We are not going to hurt our economy and make job creation more difficult, which is exactly what that plan would do. It’s not the direction that we want to go because it’s going to hurt job creators in America.”