While most of America is exhaling and enjoying a few moments of respite from the barrage of political advertisements and campaign news, some are already looking at what lies ahead for our country in President Obama’s second term. Many political battles loom large for President Obama and the divided chambers of Congress, but the most urgent battle is over averting the “fiscal cliff.” It will take a bipartisan effort to achieve a long-term, healthy solution. With instances of bipartisanship about as hard to find as a Pet Rock for your Christmas shopping this year, the outlook for a short, civil negotiation that ends in a compromise that solves America’s debt problem is bleak.

The bellwether for the success of President Obama’s second term is the fight over the “fiscal cliff” that is coming before the end of the year. In a recent report, the Congressional Budget Office found that if the “fiscal cliff” is ignored, unemployment will rise above 9% and GDP will drop by a half of a percentage point [1]. The report also states that if the current fiscal policies are kept in place, the debt will continue to grow until the economy contracts because of the debt burden in the next decade [1]. Clearly, a solution must be found. If not, the ensuing crisis would spell political suicide for much of Congress and the President. If bipartisanship is going to exist in President Obama’s second term, it must start in the next few months.

The partisan bickering has already started, however. President Obama and Speaker Boehner have begun what promises to be a long negotiation process with a series of public remarks. President Obama, who campaigned on raising the tax rate for the highest earners, claims that a, “majority of Americans agree with my approach.” [2] Boehner squashed the idea of the recently elected President’s mandate, and pointed to the House’s Republican majority as evidence to the contrary. The Republican approach is for higher revenue through lower rates. “He (Boehner) has endorsed the idea of increasing government revenue through an overhaul of the tax code without saying explicitly whether he would support a tax increase or the elimination of tax breaks without a corresponding rate cut” [2].

The public remarks of the President and the Speaker, and past negotiations over the debt ceiling, do not spark optimism about the upcoming negotiations. Negotiations do always start this way, though. Each side has laid out its principles, but both can still achieve what they set out to do. If reforms to the tax code clear out loopholes and reduce deductions for the top earners, both sides can still win. Republicans can claim they successfully fought to keep the tax rate what it is now; Democrats can take pride in the knowledge that the effective tax rate will actually be higher (even if it is the same on paper). Governor Christie and President Obama proved with their cooperation after Hurricane Sandy that bipartisanship is not dead. If the upcoming “fiscal cliff” is not solved due to partisan conflict, however, the careers of Boehner, Pelosi, McConnell, and Reid might be dead, and President Obama’s second term will be stalled before it even starts.

[1] http://www.cbo.gov/publication/43694?utm_source=feedblitz&utm_medium=FeedBlitzEmail&utm_content=812526&utm_campaign=0

[2] http://www.bloomberg.com/news/2012-11-09/obama-said-to-urge-congress-to-block-middle-income-tax-increase.html

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