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View Full Version : EVERYTHING CHANGED NOV. 6, -BLOOMBERG



Gayle in MD
11-09-2012, 09:43 AM
<span style="color: #990000">Seems we have a few here who think nothing changed after this election? I beg to differ, lol. </span>

BLOOMBERG NEWSWEEK:


The Next Four Years
Obama's Holding the Cards
Joshua Green, Novenber 7, 2012


<span style='font-size: 17pt'>At first glance, the results of the 2012 election look like a return to the status quo: President Obama was reelected, Democrats retained the Senate, and Republicans held on to the House. But don’t be fooled. The political dynamic of the next four years will be almost exactly the opposite of the last four.</span>

Sure, partisan bickering will endure. There will still be Red America and Blue America, Fox News and MSNBC. But with one big difference: During Obama’s first term, and particularly in the last two years, the Republican Party had most of the leverage. The GOP’s willingness to reject stimulus, default on the debt, and sabotage the nation’s credit rating—threats that shook financial markets—often put the White House at the mercy of the opposition.

In Obama’s second term, leverage will shift to the Democrats on almost every issue of importance. And that shift has already begun.

Once the economy stabilized, the defining struggle in Obama’s first term was the battle for revenue. From his efforts to end the Bush tax cuts for the rich, close the carried-interest deduction, and enact the Buffett Rule, Obama failed in every attempt to generate higher tax revenue to pay for new spending and reduce the deficit. Obama confronted a Republican party determined to starve government and convinced that its path back to power lay in engineering his failure. As Senate Minority Leader Mitch McConnell (R-Ky.) said in 2010, “The single most important thing we want to achieve is for President Obama to be a one-term president.” Republicans mostly held the line.

To keep the economy afloat, the White House cut the deals it felt it had to. Many, such as Obama’s agreement to extend all of the Bush tax cuts in 2010, were poorly received by Democrats. Now comes the payoff. The expiration of those cuts and the automatic reductions set to take effect at year’s end—the so-called fiscal cliff—mean that Obama and the Democrats can gain a huge source of new revenue by doing nothing at all. Republican priorities are the ones suddenly in peril. The combination of tax increases on the rich, higher capital-gains taxes, and sharp cuts in defense spending have congressional Republicans deeply worried. To mitigate these, they’ll have to bargain.

Despite their post-election tough talk, Republican leaders have dealt themselves a lousy hand. Obama can propose a “middle-class tax cut” for the 98 percent of American households earning less than $250,000 a year—while letting the Bush tax cuts expire for those earning more—and dare the Republicans to block it. If they do, everyone’s taxes will rise on Jan. 1. It’s true that going over the fiscal cliff, as some Democrats believe will happen, would set back the recovery and could eventually cause a recession. But Democratic leaders in Congress believe the public furor would be too intense for Republicans to withstand for long.

Going over the cliff would also weaken the Republicans’ greatest point of leverage: renewing their threat to default on the national debt. Right now, the Treasury expects to hit the debt ceiling in February. But if the cliff can’t be avoided, tax rates will rise and government coffers will swell, delaying the date of default—thus diminishing the Republicans’ advantage. Alice Rivlin, the founding director of the Office of Management and Budget and a senior fellow at the Brookings Institution, says that “as quickly as the IRS began changing the withholding schedule, the date would be pushed back.”

Photograph by Alessio Romenzi/Corbis

This new, post-election reality should compel both sides toward the “Grand Bargain” on entitlement and tax reform that President Obama and John Boehner tried, and failed, to strike in the summer of 2011. Most people in Washington expect these negotiations to dominate the 2013 calendar year. Here again, leverage has shifted from Republicans to Democrats. “The message of this election is twofold,” says Senator Chuck Schumer (D-N.Y.). “Americans want us to come together around a balanced compromise. And the major issue surrounding the fiscal cliff that was litigated in the election was revenues—voters clearly sided with us. The president made it a campaign issue, and he won.”

<span style='font-size: 17pt'>Privately, some Republicans, especially in the Senate, share this assessment. Many more do not. The battle to control the Republican Party and determine its course could inflict further damage on the conservative cause. “The ‘right wing of the Republican Party’ has become a redundancy,” says GOP strategist Rich Galen. “It now is the Republican Party, and there simply aren’t enough voters who agree with all of the Tea Party doctrine to win a national election.” Establishment conservatives recognize this problem. “It’s clear that with our losses in the presidential race and a number of key Senate races we have a period of reflection and recalibration ahead,” Senator John Cornyn (Tex.), the chairman of the National Republican Senate Committee, said on Nov. 7. “While some will want to blame one wing of the party over the other, the reality is candidates from all corners of our GOP lost tonight. Clearly, we have work to do in the weeks and months ahead.”</span>

http://www.businessweek.com/articles/2012-11-07/obamas-holding-the-cards

eg8r
11-09-2012, 01:08 PM
<div class="ubbcode-block"><div class="ubbcode-header">Quote:</div><div class="ubbcode-body">The political dynamic of the next four years will be almost exactly the opposite of the last four.</div></div>Great guess. Let's see in 4 years.

eg8r