How Obama won and lost in 'fiscal cliff' deal
President Obama would have looked incompetent if the nation had gone over the fiscal cliff. But now he faces three more cliffs early in 2013, and those could limit his scope.
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On balance, President Obama came out a winner in the last-minute “fiscal cliff” deal that averted income-tax hikes on most Americans and postponed deep federal spending cuts.
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Had the deal not passed Congress, both the White House and bipartisan leaders on Capitol Hill would have had egg on their faces. The public would have had cause to blame Washington for yet another self-inflicted wound that threatened to send markets into a spiral and put both the US and global economies back into recession. Republicans would have come in for bigger blame than the president, polls showed, but Mr. Obama, too, would have looked incompetent.
Instead, Obama delivered on his top reelection campaign promise: that the wealthiest taxpayers see an increase in their marginal income-tax rate in 2013. True, his definition of “wealthy” morphed significantly – from $250,000 to $450,000 in annual family income. Late Tuesday night, after the House passed the bill, Obama persisted in saying that the bill he will sign into law “raises taxes on the wealthiest 2 percent of Americans,” when in reality, it’s more like the wealthiest 0.7 percent.
But those wealthiest taxpayers will see their top rate go back to where it was during the Clinton era – from 35 percent to 39.6 percent. During the negotiations, there had been talk of setting the top rate somewhere in between.
All told, the fiscal-cliff deal produces $620 billion in deficit reduction over 10 years, a down payment on what both sides agree needs to be much more. In the cold light of day, many Republicans disappointed by the tax increase agree that the alternative – no deal – would have been worse.
“The deal to avoid going over the so-called fiscal cliff was a lousy one: tax rate increases during a weak economy, no spending reductions, nothing on entitlement reform,” writes Peter Wehner, a former Bush White House official, on Commentary Magazine online. “And yet if House Republicans had succeeded in derailing this deal, negotiated between Senator Mitch McConnell and Vice President Joe Biden, it would have been disastrous.”
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