Jay Horowitz writes: "Your last two pieces were contradictory. Which do you think it is? Will Obama cave in and sign a second extension of the Bush era tax rates? Or is he willing to go over the fiscal cliff and let them expire believing he can successfully blame Boehner and Republicans if it turns the recovery into a recession?"
Thanks for the question Jay, and here's my answer:
I no longer think he will cave. Now that Obama's been reelected and Obamacare, his signature legislative achievement, can't be repealed his overriding concern is his economic legacy. Obama wants to leave office with the booming recovery that he promised four years ago, but (predictably) failed to deliver. He blames his failure on an undersized stimulus, and believes he needs something comparable to or larger than the $860 billion package of four years ago. Knowing that Boehner and the GOP would never support such a measure his goal is to win back the House for his party so he can get it. And the only way he can do that is by doubling down on refusing to extend the Bush tax rates on the rich. and letting everyone's taxes rise thus turning the recovery into a job killing recession and causing financial turmoil and pain. But could he then make a convincing case to the electorate that the recession isn't his, that it's a Republican recession caused by Boehner and Tea Party intransigence? And that the solution is a Democrat House? Actually a better question would be does Obama believe he can pull it off and turn the country against the House Republicans? The answer I believe is yes, he believes he can.
Obama is the first president since FDR to win reelection with a bad economy; as the odds were against him winning he must feel that righteous winds are at his back and that heaven favors him for this battle over the "Fiscal Cliff. For history to judge him (like Bill Clinton) as a successful two term president Obama rightly believes he must leave behind a booming high growth economy with millions returning to work, or else be judged a mediocre president or failure. Now as Obama believes that the only way to get to a booming economy is with a new, large monstrous stimulus program, and getting it requires a Democrat controlled House, then rolling the dice, doubling down and going for broke is his only option. As Obama leaving office with a terrible recovery is unacceptable to his false sense of greatness I believe that he is willing to chance plunging the economy into a recession then use it to wrest control of the House from Republicans. In Obama's mind the pain and suffering caused by the new recession will be of short duration with the new mega-stimulus effecting the booming economy that he promised four years ago. But Obama is delusional. If he succeeds in pulling it off and in 2014 voters blaming Republicans for the recession replace them in the House with Dems a new stimulus at best will give us the same sluggish, trickle growth recovery we have today, and Obama will leave office in disappointment.