The Fiscal Cliff Fight: Picking Winners and Losers


Now that it's over (at least for a month or so) let's play a little Monday morning quarterback on the recent fiscal cliff fight.


President Barack Obama: According to HuffPo's inside sources, Obama made a big bluff that backed Republicans into a corner and even shocked Harry Reid: let's go over the cliff. Obama told congressional leaders in separate Oval Office meetings on December 28 that he was willing to risk the cliff if he couldn't get a good deal. He also promised to rake Republicans over the coals in his State of the Union speech if their obstinacy over tax increases led to sequestration cuts taking hold. The intimidated GOP, unused to such bold tactics from the White House, capitulated to tax increases on individuals making over $400,000 and families making over $450,000.

Senator Majority Leader Harry Reid (D-Nev.): According to some emails leaked to HuffPo, Reid had locked horns with Senate Minority Leader Mitch McConnell (R-Ky.) and lured him toward his position: McConnell's initially offered a tax rate increase at $500,000 for individuals and $750,000 for families and the 2012 estate tax level, (lower than the Democratic plan) and a number of cuts to Medicare payments as well as a chained-CPI basis for Social Security and veterans payments. Reid managed to get the GOP leader to agree to very similar rates — but without any cuts or chains at all, mostly by waiting it out until no time was left for major spending talks. The GOP would be blamed for any economic blight caused by sequestration and Reid knew it, leaving him in a stronger position, which he deftly took full advantage of.

Representatives Justin Amash (R-Mich.), Tim Huelskamp (R-Kan.) and many other Tea Party Republicans: They lost this fight, but raised their own profiles by defying GOP leadership on a middling plan no one really wanted. We'll have to wait until 2014 to see how this will play out electorally, but it's safe to say the conservative grassroots as well as many deep-pocketed donors will be largely displeased with the results of this agreement and may take out their frustration on moderate Republicans, empowering the Tea Party and libertarian elements in the GOP.


Speaker of the House John Boenher (R-Ohio): Boehner not only lost the support of much of his caucus over the course of tax rate negotiations, he retaliated against some of the more principled Tea Party freshmen by firing Republicans like Tim Huelskamp and Justin Amash from their committees. Amash, incredulous, pointed out that he had voted with the leadership on 95% of floor votes, and had been told by the speaker that he would be free to vote his conscience on most issues. Boehner was easily re-elected speaker of the House, but ultimately agreed to a bill with very large tax increases and no substantive spending cuts. He might save his reputation during the debt ceiling fight in February, but the end result of this agreement showed himself to be shockingly ineffective in this particular fight.

Senate Minority Leader Mitch McConnell (R-Ky.): Much like Speaker Boehner, Senator McConnell dropped the ball on spending cuts while agreeing to substantial tax increases. His credibility with both his own constituents in Kentucky and the conservative base in general is likely going to be diminished, and a strong primary challenge might see him end up like Trey Grayson.

Representative Paul Ryan (R-Wisc.): The budget warrior seemed to want everyone to believe he had seen the light since the Bush years, when he voted for every major spending increase foisted on Congress by the White House, from massive, pork-laden defense bills to Medicare Part D and No Child Left Behind. Sadly, his true colors emerged and rather than fight for cuts he chose to side with the leadership once again showing he is above all, a party man.

We'll see what February brings.