Republicans’ Leverage Against Tax Hikes for the Rich

Nov. 20 (Bloomberg) -- Did you think the election was goingto end uncertainty over the future course of U.S. economicpolicy? Dream on. There are at least three ways the standoffover the “fiscal cliff” -- the automatic spending cuts and taxincreases set to start in January -- could play out.

The first scenario is a Republican surrender. The tax cutsenacted under President George W. Bush expire at the end of theyear. Republicans want to extend all of them, while Democratssay only the ones that directly benefit the middle class shouldcontinue. Some liberals are hopeful that Republicans willrealize they have lost this fight and no longer have leverage:After the start of the year, Democrats will propose re-enactingthe middle-class tax cuts and Republicans will agree. Maybethey’ll even agree to it before the year’s end.