The president's hard line on the Bush tax cuts represents the first major test case for his theory that the GOP "fever" can be broken in his second term.
Goodbye, conciliator. Hello, Mr. Tough Love.
If Republicans are unwilling to compromise on allowing the Bush tax cuts for the wealthy to expire, America is going to go over the fiscal cliff at the end of the year. Whether out of firm belief or firm belief in saying it as a negotiating strategy, President Obama has made it abundantly clear that this is one area where he will not budge.
"Administration officials ... hardened their insistence that Obama is willing to take the nation over the cliff rather than give in to Republicans and extend the tax cuts for upper-income earners," the Associated Press reported Monday.
"We're going to have to see the rates on the top two percent go up. And we're not going to be able to get a deal without it," Obama told Bloomberg's Julianna Goldman on Tuesday.
"There's no prospect for an agreement that doesn't involve those rates going up on the top two percent of the wealthiest," Treasury Secretary Timothy Geithner said in an interview with CNBC on Wednesday. The administration is "absolutely" prepared to go over the fiscal cliff, he said.
In case there was any doubt, Obama repeated his position Thursday. "Just to be clear, I'm not going to sign any package that somehow prevents the top rate from going up for folks at the top 2 percent," he said during an event with a middle-class Northern Virginia family set up by the White House to press the president's case.
While Republicans are bemoaning the president's intransigence in hewing fast to a position he ran and won on in 2012, they might do well to look to their own behavior in setting up this month's epic power struggle with him -- and why he feels he's now in a strong enough position to stand firm on behalf of his agenda.
Obama laid out a theory for how his second term might go in remarks to donors at the Bachelor Farmer Restaurant in Minneapolis on June 1:
In this election, the Republican Party has moved in a fundamentally different direction. The center of gravity for their party has shifted. And so things that we used to be able to take for granted, that's been more difficult to take for granted over the last three-and-a-half years.
And let's just take one example: deficit reduction. We have a significant long-term debt that has to be dealt with. Now, our top priority should be putting people to work right now, because if our economy is growing faster, that actually will help reduce the deficit. But there's no doubt that it's unsustainable for us to keep on having health care costs in Medicare and Medicaid go up 6, 8, 10 percent, when the overall inflation rate and growth rate are coming in lower. That's a recipe for long-term disaster.
So what we've said is, look, let's cut out waste; let's streamline programs; let's reorganize government where we can. Let's end the war in Iraq; let's wind down the war in Afghanistan. Let's use some of those savings for deficit reduction. Let's tackle Medicare and Medicaid in an intelligent way that preserves this critical social safety net but also achieves significant savings. And let's ask those of us who've been most fortunate just to pay a little bit more. And if we put that package together we can achieve $4 trillion of savings and we can pay right now to rebuild our roads and our bridges, and rehire some teachers, and grow the economy right now. We can package that together to make progress.
And we couldn't get them to take yes for an answer -- because, ideologically, the notion of billionaires and millionaires paying a little bit more in taxes didn't adhere to the philosophy that they've been fighting for over the last several years.
Now, I believe that if we're successful in this election -- when we're successful in this election -- that the fever may break, because there's a tradition in the Republican Party of more common sense than that. My hope and my expectation is that after the election, now that it turns out the goal of beating Obama doesn't make much sense because I'm not running again -- that we can start getting some cooperation again, and we're not going to have people raising their hands and saying -- or refusing to accept a deal where there's $10 of cuts for every dollar of tax increases, but that people will accept a balanced plan for deficit reduction.
To summarize: If the "fever" of hard-line GOP opposition were to break, it would be on the question of revenues in advance of what would be a give and take on entitlements and a broader deficit reduction package. But in Obama's telling the fever would not be something brought down by endless negotiation. It would break when the GOP came around on raising taxes.