Now, that’s over. Two years of standing around, now down to business. Fast.
Republicans hold the same veto in the House of Representatives, but have already softened their 2011 gridlock position. Tom Cole, Republican of Oklahoma and deputy whip, yesterday: "Of course we need more revenue."
The president is the same, but he will have less power every day. Congress members of both parties know that they’ll be around long after he’s gone, holding the bag for whatever he wants to do.
One piece at a time: stocks first. The sell-off has not been a repudiation of Obama’s re-election. It began in Europe and Asia, issues deepening there, not improving. Some certainly sold stocks in fear of higher taxes on capital gains (an extra 3.8 percent right now, including sellers of homes, courtesy of Obamacare), and they are right, but that’s not nearly as important as weakening global trade undercutting corporate earnings.
Obama’s re-election has already had one strong benefit to business: Federal Reserve Chair Ben Bernanke now has a free hand, and his replacement to be nominated next fall will be of the same mind. It is not an accident that long-term interest rates have fallen since Tuesday night. Among many suicidal impulses afflicting Republicans has been hostility to the Fed, and we’re done with that foolishness.
Housing will benefit also. Had Romney been elected, Republicans’ compulsive hatred of Fannie and Freddie would likely have resulted in premature efforts to shut them down before any private market for mortgages had been revived. There is no telling what clamp Republicans would have put on the FHA in exchange for the bailout that it needs for no fault of its own; now it will get what it — and the nation — needs.
If we get a little lucky, the Obamanaughts may be able to recalibrate or remove the iron-headed Edward DeMarco, regulator of Fannie and Freddie, responsible for overtightened credit standards and the plague of forced buybacks of loans that has paralyzed lending.
Then the fiscal cliff. We ain’t going over, but no grand bargain, either.
Not soon anyway. Given the nature of our political system, expect something incremental and protracted. Perhaps by December an exchange of concessions buying more time. And again and again. Any grand bargain is going to involve a rewrite of the tax code, and that will take all of next year.
What is the chance that negotiations break down as they did in 2011? And we careen into another debt-limit crisis?
The president’s fiscal commission (Google that!), aka Bowles-Simpson, laid out the whole thing. The commission articulated two key principles: We must agree on the size of government expressed as a percent of GDP, and then fund it; and second, a flatter tax code with lower tax rates but free of goodies and exceptions is better for economic growth than a steeper code with higher rates of taxation.
Incredibly, in the two years since the commission, largely because leading Republicans rejected its findings, President Obama has never explained why he rejected them also. Everything he has said since indicates opposition to the commission’s two key principles: He does not want a limit to size, and he wants a steep code.
Worse, his tactics will tend to frustrate a deal. This morning Obama invited congressional leaders to the White House, expressed his wish for them to reach a "balanced" deal, and refused to say what that might be.
Everyone knows that he who speaks first loses in negotiation. However, expecting a college class to reach a bargain subject to the final approval of the professor, the professor to remain disengaged … that is exactly the 2011 pattern that House Speaker John Boehner referred to as "negotiating with a bowl of Jell-O."
If you want to be president, be president. That’s what this deal hangs on.
And as we used to say, but have forgotten how, be president not just of the 60 million who voted for you, but also the 57 million who voted for the other guy.