Fiscal Cliff Negotiators Face High Hurdles
Obama's campaign promise to raise tax rates on the wealthy precludes that. Either rates on the rich will rise and Republicans will absorb defeat on a huge priority, or the rates will remain unchanged, a political defeat for Obama.
Lobbies and the Status Quo
Both parties have talked, vaguely, of raising revenues by limiting the itemized tax deductions claimed by about one-third of the nation's taxpayers. Among the most popular deductions are those for charitable donations, health care costs and mortgage interest payments. Each is represented by muscular lobbying groups that will fight to protect the millions or billions of dollars these tax breaks steer their way.
An array of ideas has been floated. They include capping a taxpayer's total deductions at $35,000 or $50,000, and limiting the value of deductions to 28%, instead of the current 35% for high earners. The coalition of universities and other institutions that rely on tax-exempt donations is so influential that some strategists say charitable gifts should be left untouched. The housing industry says the same about home mortgage interest.
"Once you put something on the table, there is enormous pushback all around," said Rep. Peter Welch (D., Vt.). He says going over the fiscal cliff, at least temporarily, may be the only way to force Republicans to accept tax increases and to embolden lawmakers to make painful choices.
50-50 Nation, 90-10 DistrictsThe past few presidential elections prove the country is almost evenly split between Democratic and Republican sentiments. But thanks to legislative gerrymandering, Americans' migration patterns and other factors, many House members represent districts that are overwhelmingly conservative or liberal. These lawmakers may recognize that compromise is the only way to get a law enacted in Congress. But compromise may be a ticket to defeat in their next primary election by an ideological purist from their party's fringe. This is especially apparent among some House Republicans who say Obama's re-election victory means little to them and their constituents. GOP insiders say House Speaker John Boehner (R., Ohio) expects to lose as many as 70 of his 241 fellow Republicans on a career-defining vote on an eventual compromise package to resolve the fiscal cliff. If Republican defections go much higher, it may be impossible for Boehner to push on without risking his speakership.
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