11/14/2012 8:00 PM ET|
Now we need the old Obama
We need a return of the 2008-vintage president to reach across the aisle and restore confidence if we’re going to avoid another recession.
The yard signs have come down. The political ads have mercifully stopped. And now, the task turns from campaigning to governing and compromise.
The "fiscal cliff" of tax hikes and spending cuts worth $720 billion, or 5% of gross domestic product, threatens on Jan. 1. Just beyond that, we have to contend with the Treasury's debt limit -- and the tussle over raising it last time nearly torpedoed the economy in August 2011. To focus the mind even more, we also have the threats of credit rating downgrades, further loss of CEO confidence and a potential new recession.
The ugliness of our politics hit a new nadir this year as President Barack Obama's message of hope and change devolved into character attacks while Republicans focused on the makers versus the takers, the 47%, and so on. The focus was on things like Mitt Romney's tax returns, binders of women, and horses and bayonets. For the next step, we need the old Obama back -- the one who talked of post-partisanship, kept Republicans in his Cabinet and seemed more interested in results than ideological purity -- to navigate the fiscal cliff that has markets and businesses so worried. (See what's in the fiscal cliff.)
Republicans, against all odds and in a reversal of the post-2010 Tea Party ascendance, seem ready to strike a deal. And if it happens, the market will surge.
The change we need
As I've said in recent columns and blog posts, including "Obama, GOP face off at the edge," the stakes couldn't be higher. Businesses have pulled back and capital expenditures are dropping at a pace not seen since the 2008 meltdown because uncertainty about Washington is so high. Analysts at Société Générale estimate that, since 2007, political bickering has shaved 2.5% from GDP and resulted in 2.1 million lost jobs.
In dollar terms, that's nearly $400 billion in lost output and wages for average Americans.
Yet despite this, and despite that $6 billion spent on some 1.2 million political ads, the electorate largely returned the status quo to power in Washington. Obama lost a few states in the Electoral College. Republicans lost a few seats in Congress. But Americans are sending the same group back, ostensibly with the wish that a compromise is found.
Thankfully, with a demographic wave working against them, Republicans have changed their tack. They could be realizing that obstructionism -- deployed since the 2010 midterms -- and their commitment to Grover Norquist's Taxpayer Protection Pledge are failing.
Yes to new taxes?
The key to unlocking a bipartisan deal is taxes.
House Speaker John Boehner R-Ohio kicked off the wave by saying that this was the president's moment to succeed and that Republicans would be willing to accept new taxes -- if they came from tax reforms and a reduction in credits and deductions rather than increases in marginal tax rates. This would raise revenues but do so in a way that wouldn't further damage business confidence, because a simpler tax code would reduce compliance costs and end-of-year headaches.
If we're talking about replacing the revenue from ending the so-called Bush tax cuts on the wealthy, then only around $60 billion per year is needed -- and that is doable, according to research from the Tax Policy Center (.pdf file). Conservatives are falling over themselves to walk through the opening made by Boehner and to support a tax idea originally pushed by Obama as well as his 2010 Simpson-Bowles deficit committee.
Rep. Paul Ryan, R-Wis., the GOP's vice-presidential candidate, has come out in support of the revenues-via-reform idea as he prepares to return to his post as House Budget Committee chairman to play a key role in the coming fiscal cliff negotiations.
Glenn Hubbard, Romney's economic adviser, wrote in the Financial Times that to avoid the fiscal cliff, we need to raise average tax rates through revenue-via-reform instead of simply raising marginal rates -- something that will "distort behavior and reduce activity." For the rich, popular deductions on things like mortgage interest, charitable giving and health insurance should be on the table.
And Weekly Standard editor Bill Kristol wondered why Republicans haven't been willing to negotiate with the president on taxes. Appearing on Fox News Sunday, he said: "The Republican Party is gonna fall on its sword to defend a bunch of millionaires, half of whom voted Democratic, and half of whom live in Hollywood and are hostile to Republicans."
Obama, in his postelection speech, emphasized the need for the wealthy to pay a little more. The revenues-via-reform idea gives him that. But we cannot solve the fiscal cliff merely by raising taxes, since the real, long-term driver of the deficit is unfunded entitlement programs going broke because of out-of-control health care costs.
Two sides of the coin
As I've said before, the deficit isn't just about taxes and spending. It's about short term versus long term and cyclical versus structural.
There is the short-term, cyclical deficit (caused by our middling economy) that results in more spending on things like disability benefits and food stamps and which lowers tax revenues, since the employment-to-population ratio is at early 1980s levels.
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Where have you been. Obama has never reached across the aisle. Quite the contrary, It's either Obama's way or the highway.
The big problem, we still have an arrogant, disrepectful President, that is never wrong, and when you challenge him, the real angry Obama surfaces! This will not be an easy 4 years for Obama. A lot of negative issues with non leadership attached, will dogg him the next 4 years. It will not be a smooth ride for the Pied Piper.
Obama needs to understand that he and Holder are not dictators!! This is America, so he needs to start acting like an American President.
Hey Anthony, what planet are you on....the old Obama didn't do any of the things that are on you wish list. He has shown himself to be an arrogant self promoting propagandist. So no we don't need the old Obama, we need a new Obama who actually does reach out and compromise with others including his own party.
"REPUBLICANS CAN COME ALONG FOR THE RIDE, BUT THEY WILL HAVE TO RIDE IN THE BACK OF THE BUS"!
Obama bi-partisanship at its' finest!
This is the sillest, most juvenile, partisan drivel I have seen before or after the election. we have the OLD Obama. a narcisistic incompetent , lazy, arrogant , chronic liar. The absence of his involvement on major issues, healthcare, nat security, God I could go on forever, rare meetings with his own security team, ignoring the jobs council, Simpson/Bowles.
While it appears you got your education from comic books, I doubt it but have to conclude you are jockeying for some elevated status for access to the winning administration. Believe me, as astute as the admin is as to who can serve their best interests, you will be classified as dangerous given your preposterous article.
Your career, deservedly, is on the deline.
We still have the same old ovomit! Tax and spend, tax and spend, between golf games. What an idiot!!!
The word is compromise, that is what needs to happen. What is the point of most of these comments below. Why do you people want to see our country go down the tubes.....I have worked since I was 20 and am now in my 50's. I have 3 kids that I would like to know will have at least the life I've had. If we can't work together, how will this country succeed? Yes, there are a lot of issues but lets move forward and not wish this country or it's people ill will...
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