Fiscal Cliff 2013: Obama Uses Leverage to Increase Taxes on the Wealthy


The self-imposed fiscal cliff is approaching and the markets are wringing their hands while politicians bicker. Negotiating with Congress has never been the president's strongest suit. But, fresh from reelection, it seems Obama has a new strategy for dealing with the rambunctious lower house over budget negotiations. Obama is going to play his strengths, the main one being campaigning. The campaign for president may be over, but the campaign for his policies has just begun.

Obama has laid out his plan and Republicans are predictably in an uproar. The all too familiar recurring sticking point of tax increases on the wealthy continues to be anathema to most Republicans and a basic step for Democrats. But the one thing that we can count on in any fiscal cliff deal is that tax will certainly increase on the wealthy. Obama has the public and inaction on his side, while Republicans will strain themselves attempting to put up a united front.

Obama has been campaigning on raising taxes on the wealthy for over a year now and it paid off with his reelection and now it will pay off policy-wise. Most Americans support raising taxes on those earning over $250,000 a year and by talking directly to the public about it Obama has, in effect, framed himself as representing them at the bargaining table. This begs the question of who the Republicans are representing at the bargaining table, and it doesn’t take a master of deduction to figure they must be representing those who make over $250,000 a year. So the imagined bargaining table has the president representing the “middle class” (whoever that is) and House Republicans as representing the wealthy. Whether or not this is true or not is irrelevant, what matters in politics is perception.

As for inaction, Obama has it because if nothing is done at all the one thing Republicans don’t want, a tax increase on the wealthy is exactly what will happen. A tax increase on all Americans in general would happen and if Republicans think an increase on just the wealthy is unacceptable than a tax increase on all Americans must seem sizably worse. So Obama can sit and wait until the Republicans come round lest they get more tax increases than Obama is even asking for. Of course Obama won’t sit and wait, he will travel the country appealing to voters and telling them that Republicans are holding them hostage for the interests of the wealthy.

Obama seems to have found a negotiating niche for himself that includes making the American people feel like they are at the negotiating table. This means that Republicans cannot seem too dismissive otherwise they will come off as being dismissive of actual voters. Luckily for Republicans, with all the other things put forward in Obama’s plan, including more stimulus, there are plenty of other things for them to reject, refuse, and prevent. The increase in taxes on the wealthy just won’t happen to be one of them.