Going into the "fiscal cliff" negotiations, President Barack Obama had the leverage over Congressional Republicans on increasing tax rates for everyone except for the middle class. If nothing had been done about it, everyone's taxes would have gone up to Clinton-era levels.
While many Republicans on Capitol Hill are disappointed that the deal passed by the Senate lacked cuts to spending, it is an under-reported fact that 98 per cent of the Bush-era tax cuts are now permanent.
The Democratic Party that voted against the Bush tax cuts of 2001 and 2003 are now supporting them – an important philosophical shift in just 10 years. Without any leverage against Mr. Obama, Republicans were still able to save taxpayers making up to $450,000 from paying more to the federal government. This happened even though Mr. Obama won re-election and the Democrats control the Senate majority.
The Senate legislation delayed automatic spending cuts for two months, setting up the likelihood of another big budget battle in February. Mr. Obama said this week that he will not negotiate with Republicans over the debt ceiling, but the GOP doesn't seem to be listening.
Senate Republican minority leader Mitch McConnell called for the Senate to take the lead and address the debt ceiling by early next month with legislation that would significantly trim spending. "Democrats now have the opportunity – and the responsibility – to join Republicans in a serious effort to reduce Washington's out-of-control spending," Mr. McConnell said. "That's a debate the American people want. It's the debate we'll have next. And it's a debate Republicans are ready for."
Mr. Obama won the immediate public relations battle by championing tax cuts for the middle class – an important policy that Republicans invented in the first place. This victory will be short-lived because the GOP will now come together and have its leverage back to demand real spending cuts as a permission slip for raising the debt ceiling – something Mr. Obama will desperately need to remain effective.
Ron Bonjean served as lead spokesman for Republican leaders on Capitol Hill and as head of public affairs to the U.S. Secretary of Commerce in the George W. Bush administration