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Mark Mardell
North America editor
Fiscal cliff: Barack Obama's trap for Republicans
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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Comment number 668.
abolitionist31st December 2012 - 23:58
LucyJ (663),
“… But if America is facing unsustainable debt isn't higher taxes and spending cuts the solution that even our ratings agencies are seeking? …”
You are correct. That is one way that the Federal Deficit can be resolved.
“… in which this is actually a good thing?”
When compared to some alternatives, it is.
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Comment number 667.
MagicKirin31st December 2012 - 23:58
I know the BBC and Mark will never report this. But Obama thought having a press coverage to gloat and lord over the Republicans and anoounce no entitlement cuts was important than American having to pay higher taces
So Obama voters you have to answer why you voted for such a superficial vain man.
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Comment number 666.
LucyJ31st December 2012 - 23:50
BritishMexican: What is a " Fiscal Cliff" ?
America's fiscal cliff is the rich+corps having to pay same percentage of taxes as middle class whilst spending cuts decrease the debt
Its the best possible thing that could happen to America
I think we can only be grateful to reach such an outcome
May God Bless America and her Allies Forever and Ever
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Comment number 665.
paulmerhaba31st December 2012 - 23:45
I have never heard of a temporary tumble from off a cliff.before then i realised it must have hit the ring fence and bounced back up again. Cool
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Comment number 664.
a-brit-in-mexico31st December 2012 - 23:33
America is going over the fiscal cliff!
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What is a " Fiscal Cliff" ? Cliff Richard sings"Money" in the States
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Comments 5 of 668