Obama's Fiscal Cliff and the Chicago Way

A friend from Chicago, involved in Illinois politics who has known Obama since his early days in the Illinois State Senate, told me that two things that trump everything else in Obama’s mind: redistributing the wealth and empowering labor unions.  Look at everything the President does, my friend says, and you will find one or the other lurking in the background.

My friend’s analysis may explain a lot about the current state of affairs concerning the standoff over the so-called fiscal cliff and Obama’s refusal to abandon the idea that he must raise taxes on the rich. The President and his henchmen certainly understand that raising taxes on the richest 2% of taxpayers (in reality these people are not the richest but those with the highest incomes) makes little economic sense – doing so would reduce the deficit for 2012 from $1.10 trillion to $1.02 trillion or, in these numbers, really not at all. So something else is going on.

There is no question that there is plenty of politics going on, for one thing.  Obama didn’t learn how to play politics in Chicago for nothing, and he didn’t come out of his second successful presidential campaign without realizing how to hoodwink the voters while putting Republicans over a barrel.  As squishy Republicans begin to agree with him that maybe, just maybe, we could raise taxes just a little bit Obama understands that if he wins on this one, he’ll be able to push Congressional Republicans around for the rest of the Congress.

Obama is also an ideologue, and has made no bones about his intent of transforming the country into his vision of a socialist, or near-socialist, paradise.  First on the list is to redistribute the wealth, best done through the tax code.

It can also be done by eliminating loopholes and deductions (especially those most often used by the rich) and reforming the tax code, which is exactly what Obama proposed in July of 2011.  But now that John Boehner is proposing it, Obama resorts to Chicago politics and refuses to even consider that, and refuses as well to even consider cutting spending knowing that when Boehner caves, Obama can get a start at wealth redistribution and leave the mess that follows to his successor, whoever that may be.

Obama and the Democrats would very much like to get the fiscal cliff – debt limit – defense sequester debate out of the way so they can move on to other things. They all understand the dynamics of a second term, how miserable it can be, and how soon anything productive they have in mind for the country grinds to a halt.  They all know that effectively they have about 14 months to get anything done, as by March of 2014 the fall Congressional elections will be the first – or only – thing on their minds, and everything they do will be geared toward re-election.  Just ask Lyndon Johnson, or Richard Nixon, Bill Clinton, George W. Bush – and even Ronald Reagan.  All had big trouble in their second terms, and all lost plenty of seats in Congress in that awful sixth year. Neither Congressional Democrats nor Obama want to be raising taxes, arguing about Medicare and Social Security, or voting on the debt limit any closer to November 2014 than possible. Losing issues, particularly in an off-year election.

In his Saturday radio address to the nation on December 8, Obama said that there is still some wiggle room on what Democrats are willing to give in negotiations over the “fiscal cliff.” But increasing taxes on the wealthy, he stressed, is “one principle I won't compromise on.” In Obama’s world, in other words, ideology trumps the good of the nation anytime.

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