US & Canada

Fiscal cliff: Barack Obama's trap for Republicans

  • 30 December 2012
  • From the section US & Canada
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US President Barack Obama (28 Dec)
President Obama's purpose is political, not fiscal

America's reckless politicians may still take the country over the cliff into an uncertain land where recession looms.

But President Obama has sprung his trap. The Republicans are in a corner - over a barrel - although perilously unaware of their plight. Before the election, during the election and since his victory, he has insisted the rich must pay a little more in taxes. It is a policy that appeals to his party but doesn't really make much of an economic impact. But its purpose is political, not fiscal.

He has announced his fallback position. If there is no bipartisan deal by the leaders of the Senate, he will get Democrats to introduce a minimalist bill. It would be, Mr Obama said in his weekly address, an "up-or-down vote on a basic package that protects the middle class from an income tax hike, extends vital unemployment insurance for Americans looking for a job, and lays the groundwork for future progress on more economic growth and deficit reduction".

If Republicans vote it down, they will be directly voting to bring in a tax rise on "ordinary Americans".

I'll say it again. Republicans are voting for a tax rise on most people.

It is a powerful incentive to reach a better deal. Some Republicans will glory in sticking to their principles and know the folks back home may agree with them - the rich should have tax cuts too, that it is a matter of principle.

But enough may realise that Mr Obama is manoeuvring to stick their party in aspic and stop them changing in the wake of their defeat in November. He would stick a label on them that would brand them not only out of touch, but so fanatically wedded to the demands of the rich that they are unconcerned about the damage they could do to their country and its people.

It could turn out differently, but I suspect the Republicans are either about to cave in or to lose the blame game.

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