Who Will Blink First, Obama or Boehner?

Nov. 8 (Bloomberg) -- This is part of a continuing dialogue between Margaret Carlson and Ramesh Ponnuru about the 2012 campaign.

Ramesh: Well, that was fast. Not even 24 hours after President Barack Obama won re-election, Speaker of the House John Boehner restarted the argument over what to do about the “fiscal cliff”: the fact that taxes are scheduled to go up, and budgets down, at the start of January.

He started his Wednesday afternoon remarks with the usual democratic pleasantries: Congratulations to the winners and some piety about working together on the public’s business. Then he sent much of Washington into confusion by saying, “We’re willing to accept new revenue under the right conditions.”

The conditions: The revenue has to get raised through tax reform rather than increases in tax rates, and entitlements have to be reined in, too. He challenged Obama to come to the table.

Some conservatives freaked out, accusing Boehner of caving on tax increases. Some liberals said he wasn’t really as moderate as he sounded. Does Boehner mean that tax reform should raise money by cutting tax breaks more than it cuts tax rates? Or does he mean that it should raise money just by encouraging economic growth?

If it’s the first, Boehner is going to have a problem with conservatives -- especially Grover Norquist, the party’s anti-tax enforcer. If it’s the second, he’s not talking about much revenue.

That’s a bargain that sounds grand to me, but liberals who just won an election might disagree, don’t you think? My guess is he’s being ambiguous so he can gauge the reaction.

Another question: What leverage does Boehner have, and what leverage does he think he has? Obama doesn’t have to cut any deal to get a lot of extra revenue. He can let taxes go up as scheduled and challenge the Republicans to cut them only for the middle class. Republicans can either go along or decide not to and then blame him for the resulting middle-class tax hikes. Who likes their odds better in that fight?

Republicans have another bit of leverage, beyond the threat of blaming Democrats for tax increases: We’re getting close to hitting the debt ceiling again, and in the normal order of things House Republicans would have to agree to lift it. Boehner didn’t link a tax deal to the debt ceiling in his remarks. What do you want to bet those issues stay separate, Margaret?

(Ramesh Ponnuru is a Bloomberg View columnist. Follow him on Twitter.)

Margaret: Ramesh, no reason to be worried that Boehner is going soft. He’s going through the motions of post-election magnanimity. His party lost -- he had to say something nice about working with the president.

What confused you, I think, was that you saw a glimpse of the old Boehner before he was taken hostage by the Tea Party -- the martini-drinking smoker who used to dabble in compromise.

That was before he found himself leading, or following, a caucus that was willing to do anything to have its way. House Republicans were willing to reject stimulus at a time of grave financial peril, and default on the debt, to remain pure in their opposition to no new taxes (except, as some of them proposed, on the poor, so they would have “some skin in the game.”)

In an election that was otherwise a debacle for Republicans, the House held its majority, and Boehner holds the gavel as long as he coddles his most extreme members. So he will.

Meanwhile, the president (unless you see something in him, Ramesh, that I don’t) still believes in this hope-y, change-y stuff Republicans consider a joke. He still sees himself as a historic figure that can bridge the partisan divide.

It is Boehner’s tiny, eensy-weensy bit of openness to dealing with Obama that is enraging conservatives. At the same time, it is playing to Obama’s view of himself. The president’s signature trait is an inability to negotiate from strength. He leads with his best offer. If Obama were buying a car, he’d probably pay full price and leave without radial tires.

In fairness to Obama, it’s foolish to call the bluff of an opposition that’s already shown it will allow the U.S. to default on its debt.

You’re right, Ramesh, that Obama doesn’t have to do anything at all to raise revenue. But he can’t risk raising taxes on the working and middle classes when the economy is still shaky. Republicans, by contrast, are willing to risk anything.

(Margaret Carlson is a Bloomberg View columnist. Follow her on Twitter.)

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