By electing a still divided Congress, and by bringing Barack Obama back to the White House, voters have sent out an unequivocal message: the specter of the “fiscal cliff” must be driven out by resorting to a compromise between the parties. This is the opinion of Democratic Senator Chuck Schumer, according to whom the compromise will have to include tax increases and spending cuts, to prevent the unsustainable trajectory of the federal deficit from bringing the accounts to a critical level in the coming years.
This is an important opening, even if it must be remembered that, in reality, the willingness to resolve the dilemma in a bipartisan way has always been in the heart of the Democrats. A little less, however, in those of the Republican party, often hostage to the radical right, which pounded the table whenever there was talk of tax increases to consolidate public finances.
Obama's re-election, however, changes the cards on the table, relaunching the strategic and negotiating power of the mayor. Which can rightfully be considered representative of all Americans, rather than just a fraction. Especially after the publication of a poll, which reveals how a part of the conservative electorate deems it necessary to sacrifice the richest 2%, able to pay part of the 600 billion dollars which – if an agreement is not reached – will be spread between new taxes (for 440 billion) and spending cuts, starting from 2013 January XNUMX, almost certainly bringing the economy back to recession. A request also endorsed by the President, who, yesterday, during his first post-election appearance, opted for a tug of war, placing tax increases on income exceeding $250 as a necessary condition for reaching an agreement.
Meanwhile, the Republican speaker in the House, John Boehner, fell to more lenient advice, covertly opening up to an agreement containing higher revenues, but to be obtained not by introducing new heavy taxes or by adjusting the rates upwards, but by reforming the tax authorities and the deduction system, but also by combating elusive practices. However, the opening must be taken with a grain of salt, given the ease with which – especially in August 2011 – Boehner bowed his head to the demands of the Tea Party, the maximalist wing of his own party.
The situation remains very complex: the Republican proposal is probably insufficient to contain the deficit, and more substantial cuts to federal programs (such as health) would be needed to settle the accounts. But the Democrats don't agree, and they deem it necessary to bring the tax system back up to speed, bringing the marginal tax rates on high incomes back to the levels prior to Bush's 2001 cuts, then renewed by Obama in his first term.
However, the President can play the game with more momentum and bet on the fact that the Republicans cannot risk too much. Especially after the commendable fair play, and the call for a leadership of "national cohesion", following the electoral victory, it would be politically inconvenient to exacerbate the climate and derail the agreement due to an ideological quirk, triggering the entry into force of the "ravine budget", a "monster" that would account for 4% of GDP in 2013 alone, contracting (according to estimates by the Congressional Budget Office) the economy by half a point next year and bringing unemployment levels above 9%, nullifying the tiring progress of the last few months.
A scenario that also frightens the financial community, so much so that it is convinced to take a first, timid step back. Schumer confirmed it: the ongoing negotiations have already seen Wall Street willing to accept harsher taxation, but only on condition that a structural spending review thoroughly reviews the tax structure and federal spending programs. But, in any case, at unchanged rates. The compromise is not yet on the table, but some encouraging glimmers are starting to appear. At this point, one solution is convenient for everyone: if ideological warfare is a valid workhorse in the electoral campaign, after the polls the real economy must win.
