November 15th, 2012
Republicans were handed a convincing defeat at the polls, not only losing the race for the presidency but also losing ground in the Senate. The good news for the country is that Republican leadership is not in denial. The day after the election, Speaker of the House John Boehner outlined a balanced approach for easing federal policy off the fiscal cliff. He offered a combination of revenue increases and spending cuts, with an emphasis on “real changes to the structure of entitlement programs.”
Two days later, President Barack Obama responded by offering his own balanced approach—more federal spending, lower taxes for everyone but the wealthy, and the certainty of much higher budget deficits for years to come unless the savings proposed by the president last February actually materialize. This draws the line where it was before the election, with no sign that this will lead to meaningful policy negotiations.
This seeming recalcitrance is likely the result of the irrational exuberance that often strikes newly elected officials. To paraphrase Alan Greenspan, irrational exuberance has unduly escalated the president’s political asset value. Contrary to his current stance, President Obama does not have a strong hand in the upcoming fiscal debate. If he wants to avoid a double-dip recession and leave a positive legacy, he will have to accept compromises and sell them to his Democratic colleagues in the Senate. That inevitably means health policy, including the Affordable Care Act (ACA), will be on the negotiating table.Read the rest of this entry »