Time to Warn Markets: US Will Go Over Fiscal Cliff

Obama, Reid Want Cliff; Boehner, Reid Don’t Have Votes for Deal
By Ron Meyer

It’s the week before the country is set to head over the “fiscal cliff,” yet President Obama, Majority Leader Reid, and Speaker Boehner are nowhere close to a deal. Nothing is going to change before January 1. Here’s why, for each leader:
President Obama:

  • The “fiscal cliff” reverts to Clinton-era tax rates, cuts defense spending, and raises the estate tax–all policies he supports. Obama couldn’t be in a better bargaining position, considering, in reality, he supports the cliff. When we go off the cliff, he’ll blame the impasse and tax increases on the GOP, and according to the polls, that strategy will work. Even better: Next year, Obama will propose “middle-class tax cuts” (going back to the Bush rates), and the GOP will face voting against a tax cut.

Majority Leader Reid

  • Reid can’t pass a bill in the Senate because 13 Democrats are vulnerable in 2014. Many of them are in deep red states where voting for a tax hike (like all the deals so far proposed) won’t be acceptable. Voting next year for a “tax cut” is a much better option. Important to note: Reid only needs 50 votes. Any budget cuts fall under budget reonciliation. Still, even with this lower threshold, he doesn’t have the votes–yet.

Speaker Boehner

  • Speaker Boehner’s speakership is on the line, and he’s stalling until the Speaker’s election on January 3. He’s become less popular among the American people than Nancy Pelosi, and among many House GOP members, his attempt to force passage of “Plan B” was the last straw. If Boehner negotiates anymore with Obama, his votes for speaker will continue to disappear.
American Majority Action was the only organization to predict “Plan B” would fail in the House. We now feel comfortable predicting that the US government will go off the fiscal cliff on January 1.

Boehner can’t get the votes for a deal. Reid can’t get the votes for a deal. Obama and Reid don’t want a deal.
Many media pundits are running around screaming, “How did we get here?!”. Well, hopefully they’ll now realize that this was President Obama’s plan all along. Remember, Speaker Boehner agreed to compromise on the deal which set up the sequester, banking on Romney becoming President.

Obama agreed to this plan because he knew that if he won the election, he’d be in the driver’s seat. If and when we go off this cliff, Obama and the Democrats will have scored a huge vistory.