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Now that voters have spoken, what'll our leaders do?

Our state and national leaders may have been elected on social platforms, but their upcoming agendas will be dominated by taxing and spending issues.

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Meanwhile, President Obama faces no more elections. He knows that his presidency ultimately will be judged on his success or failure in dealing with these unresolved issues. The returning congressional leaders, House Speaker John Boehner and Senate Majority Leader Harry Reid, are not term-limited, but they know that their own parties' majorities are tenuous. All recognize that they've got to deliver.

The electoral outcome was close, but there was no doubt that Obama won both the popular and electoral votes. No hanging chads left over to further polarize partisans. In Obama's election-night remarks, and in House Speaker Boehner's response the following day, there were highly encouraging pledges of the bipartisan cooperation that will be necessary. 
 
We are at one of those in-between moments
when even fierce partisans are willing to ease up for awhile. But haste will be necessary because, among other things, the U.S. House and Senate taking office in 2013 will have even fewer moderates within them than the ones leaving office. The partisan power balance within them will not be greatly different, but retirements and electoral defeats have removed still more of the centrist, compromise-ready legislators who once facilitated constructive dealmaking. Rep. Norm Dicks is a notable example.
 
The first task at hand, and a portent of things to come, will be Obama's  and congressional leaders' need to deal with the so-called "fiscal cliff," which looms Dec. 31.  Automatic spending cuts and tax increases, scheduled for then, will cut as much as 2 percent off the Gross Domestic Product next year, cause a calamitous drop in financial markets and trigger a renewal of raging partisanship — unless Obama and both parties' congressional leaders step up to avert them.  
 
Republicans know that Obama won the election. Thus Boehner last Wednesday put tax-revenue increases on the table. But he also made clear he is looking for a larger framework in which tax rates will not be raised, in which Dec. 31 defense spending cuts will be eased and in which some kind of commitment is made to address long-term entitlement (Medicare, Medicaid, Social Security) reform. There is a deal to be made within that framework and one which Obama, in fact, might welcome.

The Dec. 31 "sequester" strategy, which Obama originated, was meant to give him leverage in short-term budget politics — not to actually happen. So everyone wants a way out. They should be able to find it. The obvious way — both short term and longer-term — will be to turn to tax reform, which both political parties theoretically support, which would provide a gusher of fresh federal revenues without having to increase overall tax rates. Both the bipartisan Simpson-Bowles and Domenici-Rivlin budget recommendations spelled out how that could be done without denting "motherhood" deductions such as those for health care expenses and home-mortgage interest (although I, personally, would favor a cap on deductible mortgage interest). It could be done, in fact, while maintaining progressivity and even lowering overall tax rates. Tax-reform virtue thus can flow from budget necessity and offer both Democrats and Republicans reason to declare victory.  
 
The whole big deal cannot be made by Dec. 31 so some initial, transition measures no doubt will be taken, with both sides agreeing on the larger structural framework to follow in 2013. If, for some reason, a fiscal-cliff deal cannot be reached by Obama and the outgoing lameduck Congress, we'll get immediate bad signals from financial markets and talk of downgrading federal-government securities. Look for at least a 2,000-point immediate drop in the Dow Jones average (and a commensurate drop in your net worth). That would set the fellas back to work.
 
A new cabinet: The other big portent of things to come will be the constitution of Obama's second-term cabinet. Will it be composed of large, confidence-inspiring leaders or smaller-bore hacks? No one at this point is certain.
 
Secretary of State Hillary Clinton announced a year ago that she would retire. Treasury Secretary Tim Geithner has said several times that he expects to be dumped and he no doubt is correct in that expectation. Defense Secretary Leon Panetta also has sent signals that he will depart. Those are the Cabinet's Big Three. Another appointment, to be made immediately, will provide a replacement for CIA Director David Petraeus, who resigned last Friday, citing an extra-marital affair. 


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Comments:

Posted Sat, Nov 10, 7:59 p.m. Inappropriate

For a guy who brings up Simpson-Bowles ad nauseum, TVD seems unfamiliar with a key proposal in the chairmen's final report regarding the mortgage interest deduction:
http://www.fiscalcommission.gov/sites/fiscalcommission.gov/files/documents/TheMomentofTruth12_1_2010.pdf
12% non-refundable tax credit available to all taxpayers; Mortgage capped at $500,000; No credit for interest from second residence and equity.
TVD seems not to know that Simpson-Bowles does indeed dent this politically popular deduction. I happen to agree with this proposal. I sure wish more Americans understood that working-class and middle-class people would actually benefit from this proposal, and that the current mortgage interest deduction is heavily skewed to benefit wealthier people with expensive homes and vacation residences.
Also, TVD's suggestion that the battle over taxes and government programs is like choosing between eating your vegetables and dessert is offensive and clueless. He doesn't seem to get that maintaining Social Security, Medicare, Medicaid, food stamps, college aid, etc. etc. is hardly a matter of frills. It's a matter of survival. Budget hawks like TVD still have not explained to us how lower-income and working-class people struggling to get by will be able to handle the types of cuts the budget hawks favor.

Posted Tue, Nov 13, 9:47 a.m. Inappropriate

A couple brief updates to this piece.

In listing costly local projects, I neglected to mention the deep-bore tunnel which will replace the Alaskan Way Viaduct and, of course, the 520 bridge renovation which is being only partially paid for with tolls. The Seattle City Council, additionally, wants to spend $10 million to study extension of street car lines in the city. The street cars are horrendously expensive as compared to simple expansion of existing bus service.

The state Charter School proposal, not discussed in this piece, has since passed narrowly. It does not relate directly to taxing/spending decisions but reflects general public impatience with performance of public institutions.

At national level, it now seems likely that only Education Secretary Arne Duncan, an old Obama pal from Chicago, is likely to remain among present members of the Obama Cabinet. This signifies a big shift from many prior administrations, where first-term Cabinet members stayed on
through a second term.

Re the Dec. 31 "fiscal cliff": I've talked with several senior Democrats in the Congress who are generally optimistic that a satisfactory deal can get made to avert the crisis. However, after initial conciliatory statements, both White House and congressional Republicans have begun to harden their language. We appeared headed to the brink before any deal can get done.

Posted Tue, Nov 13, 9:57 a.m. Inappropriate

As usual, TVD refuses to acknowledge the need for a correction. That's not how credible pundits operate.

Posted Wed, Nov 14, 5:40 a.m. Inappropriate

What Harris Meyers doesn't seem to get that maintaining and expanding Social Security, Medicare, Medicaid, food stamps, college aid, etc. etc. in their current form, without reforms is a form of bribery of the electorate. It's a matter of survival for the Democrat party in both Washingtons.

Cameron

Posted Thu, Nov 15, 12:49 p.m. Inappropriate

Stupid question: Now that voters have spoken, what'll our leaders do?

They will return to ignoring what we say.

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