Monday, December 26, 2011

On the recent mess in Washington

Business Times - 27 Dec 2011

Tax cut battle in House exposes divisions within Republican Party

The spectre of the party being taken over by radicals is bound to alienate moderates and help Obama win election


REPUBLICANS were licking their self-inflicted political wounds after what would probably be recalled as the Great Christmas-Eve Tax Cuts Battle (GCETCB) concluded with a legislative ceasefire but with clear political victory for President Barack Obama and the Democrats.

Indeed, after a week of unyielding opposition by Republicans in the US House of Representatives to a modest temporary or 'stopgap' legislative measure that enjoyed wide bipartisan support, both the House and Senate finally approved - just two days before Christmas - a short-term extension of the payroll tax cut and federal unemployment benefits.

It was a nice holiday present for President Obama who signed the legislation before leaving to join his family on vacation in Hawaii, and leaving behind the Republican House Speaker John Boehner with an eggnog splashed all over his face.

The legislation that extends the payroll tax cut, set to expire on Dec 31, through Feb 29 does very little to accelerate the sluggish economic recovery. But a failure to ensure that 160 million American workers do not see a reduction in their pay cheques and the jobless next year would have probably brought the slow recovery to a halt sooner than later.

In any case, lawmakers would still have to negotiate an extension of the payroll tax cuts and to decide whether to extend the long-term emergency benefits for all of 2012 after returning from their Christmas recess.

But the week-long tussle over the stopgap measure, pitting Speaker Boehner and the House Republicans against President Obama and the Democrats as well as against the Senate Republicans, has exposed deep political fissures in Republican ranks.

And together with the continuing resistance by Republican voters to nominate the relatively moderate former Massachusetts Governor Mitt Romney as their presidential candidate, the torturous legislative battle also raised the spectre of the possible takeover of the party by the Tea Party movement and other radical forces that would make it difficult for Republicans to defeat President Obama next year and win control over the Senate.

As much of the conventional wisdom in Washington put it last week, the Republicans seem to be on the way of snatching defeat out of the jaws of victory. After all, the same conventional wisdom has been suggesting for most of this year that with the unemployment rate between 8 and 9 per cent and with most indicators pointing to stagnant economic conditions - with the financial crisis in the eurozone elevating the threat of a double dip recession - any electable Republican presidential candidate had a better than even chance of beating President Obama.

These expectations for Republican victories next year - including the possibility of regaining control of the Senate (and maintaining a majority in the House) - were all based on the assumption that the independent voters who had helped elect President Obama in 2008 would switch their allegiance to the Republicans in 2012.

But most of these independent voters describe themselves as 'centrist' and 'moderate' in terms of their political orientation. What they want to see is an end to the gridlock in Washington and a president that is able to bring together the two major political parties to advance a mixed bag of pragmatic policy programmes aimed at reviving the American economy and reducing the national debt while protecting the interests of the middle class.

What these independent voters are clearly not looking forward is the coming to Washington of extreme right-wing Republican leadership trying to press forward a radical policy agenda that would make it impossible to achieve any sort of a bipartisan programme to put America's fiscal house in order.

But that is exactly the kind of nightmare political scenario that seemed to be occurring in Washington last week, as the notions of ideological purity and political partisanship were driving the Republicans to try to sabotage a deal that was actually going to ensure that Congress would approve a tax cut for the middle class (in the form of the extension of the payroll tax cuts) which remains one of the most cherished Republican goals.

In fact, Senate Republicans had earlier struck a deal with the White House and the Democrats to support the two-month extension and it seemed that Mr Boehner and the House Republicans would join their counterparts in the other legislative chamber and pass the bill.

But Speaker Boehner found himself facing strong opposition to the move, especially from lawmakers who are affiliated with the Tea Party who insisted they that didn't care whether taxes would go up and unemployment benefits would be eliminated as long as the White House refused to accept all their conditions. So what if the deal does not win Congressional approval? As far they were concerned, the most important thing was that President Obama suffered another political defeat and that the economic recovery got stuck, making it unlikely the current White House occupant will be re-elected next year.

This radical Republican approach only played directly into President Obama's hands, helping him paint the Republicans as obstructionists who are putting their ideology and political interests before the interests of the people - not to mention just pure political common sense. So it was not surprising that by the end of the week, Speaker Boehner and his colleagues raised the white flag and agreed to approve the deal.

Yet the recent Washington spectacle seems to fit into the general election strategy being pursued by President Obama that is aimed at portraying the Republicans as radical ideologues who protect the interests of the wealthiest Americans. Calling for raising the tax rate on super-rich Americans, President Obama and the Democrats are hoping to market themselves to the voters next year as the allies of ordinary Americans, of the so-called 99 per cent.

The debate taking place between the leading Republican presidential candidates that tends to highlight their radical right wing positions - for example, former speaker Newt Gingrich's call for abolishing some of the child labour laws or of the social conservative agenda of Representative Michelle Bachmann - is not going to help the party win more support among the moderate independent voters.

Moreover, a few pieces of good economic news - signs of recovery in the housing markets; drop in unemployment in 43 states in November; a more bullish stock market; more stability in the eurozone - could also provide President Obama with added political momentum, which seems to be reflected in results of public opinion polls that point to rising support for the president.

Indeed, according to the most recent Washington Post-ABC News poll, President Obama's approval ratings are continuing to go up while that of the Republicans in Congress is falling. President Obama's approval ratings have risen to 49 per cent from 44 per cent approval last month. And most Americans prefer the way President Obama has been managing the economy over that of the Republicans in Congress.

And the polls also suggest that President Obama would defeat all the declared Republican presidential candidates if the general election were to take place this month, with one exception. He is running even with Mr Romney, suggesting that notwithstanding all the good news, President Obama remains electorally challenged. But then, the Republicans could shoot themselves in the foot once again by not selecting Mr Romney as their presidential candidate.

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