WASHINGTON (AP)—It may be just a bluff or a bargaining ploy, but the White House is signaling that President Barack Obama is willing to let the country go over the Fiscal Cliff, a hard-line negotiating strategy aimed at winning concessions from Republicans on taxes.
If Washington really does fail to avert the looming series of tax hikes and spending cuts, the White House will portray Republicans as the culprits for insisting on protecting tax cuts for the wealthy, an effort the administration is laying the groundwork for now.
“This is a choice of the Republican Party,” said Dan Pfeiffer, White House communications director. “If they are willing to do higher rates on the wealthy, there’s a lot we can talk about. And if they are not, then they’ll push us over the cliff.”
But going over the cliff also would be full of risk for a president fresh off re-election and facing at least two more years of divided government.
Ending the year without a deal could roil financial markets and dent consumer confidence just as the economy is strengthening. It could make it harder for Obama to get Republican help on his second-term priorities like overhauling the immigration system and the nation’s tax code, or in getting potential Cabinet replacements confirmed.
And it would signal to the country that the president’s campaign prediction that the GOP “fever” would break following his re-election was a pipe dream.
House Speaker John Boehner says Obama is playing a risky game. “If the president really wants to avoid sending the economy over the Fiscal Cliff, he has done nothing to demonstrate it,” the speaker said.
White House advisors say the president wants to avoid going into next year without a tax and spending deal, a scenario they say would hurt the economy. But with few signs of progress in postelection negotiations with Republicans, administration officials are hardening their warning that Obama will take that risk if the GOP refuses to drop its opposition to raising tax rates on families making more than $250,000 a year.
Of course, the White House warning could be a bluff, offered in the belief that Republicans are unlikely to back down on taxes unless they believe Obama is willing to go over the cliff.
The White House says Obama’s firm stand on tax rate increases for the wealthiest 2 percent of Americans is driven by economics. The debt-saddled country can’t afford to continue with the George W. Bush-era tax cuts, the president and his advisers argue.
Obama has made that case to Republicans before only to back down in the final stages of negotiations. But this time around, the president and his team believe they hold the political leverage.