Obama Gives Republicans A Tough Ultimatum On Taxes

December 28, 2012 2:15 p.m.

With the fiscal cliff rapidly approaching, President Obama was unflinching in his tax stance on Friday, threatening to use his leverage to force Republicans into an unenviable position if they fail to agree to a deal in time.

After a White House meeting with congressional leaders, Obama held a news conference to issue a tough ultimatum to Congress: reach a deal now or block my middle class tax cut in the new year.“So if we don’t see an agreement between the two leaders in the Senate,” the president said, “I expect a bill to go on the floor — and I’ve asked Senator Reid to do this — put a bill on the floor that makes sure that taxes on middle class families don’t go up, that unemployment insurance is still available for 2 million people and lays the groundwork then for additional deficit reduction and economic growth steps.”

Here’s how that threat would play out. Taxes will automatically go up on all income earners next week if a deal isn’t struck. Senate Majority Leader Harry Reid (D-NV) will put forth legislation to bring taxes back down for middle incomes. That’ll leave Senate Republicans with a choice: either let it move forward and pass, or go on record filibustering a middle class tax cut as the nation watches. Both bad choices.

Of course, that still means House Republicans would need to drop their obstruction, which leadership has steadfastly refused to do. Speaker John Boehner (R-OH) held firm during Friday’s meeting on his position that he won’t act until the Senate passes or amends House-approved legislation to avert the cliff, his office said. His members vigorously oppose any tax hike from current levels.

But Democrats are betting on the fact that with the public tuned in to the unfolding fiasco, the GOP’s resistance to lowering middle class taxes — and permitting rates on incomes above $250,000 to rise — will be unsustainable in the new year.

“I believe such a proposal could pass both houses with bipartisan majorities, as long as those leaders actually allow it to come to a vote,” Obama said at the news conference. “If members of the House or the Senate want to vote no, they can.”

In other words, Obama isn’t hesitating to exercise what Democrats correctly recognized as their upper hand on the issue, not only because they have the ability to block any outcome they dislike but because polls say the public is likely to blame Republicans if the nation plunges over the cliff.

For now, Reid and Senate Minority Leader Mitch McConnell (R-KY) have been tasked with hashing out a deal, which both chambers will be prepared to vote on. Obama recently offered to raise the tax cut threshold to $400,000 and cut future Social Security benefits, among other spending cuts, in order to secure a deal in time. Boehner turned it down, demanding fewer tax hikes or more entitlement cuts. Negotiations subsequently fell apart.

“I still want to get this done,” Obama said. “It’s the right thing to do for our families, for our businesses and for our entire economy. But the hour for immediate action is here. It is now.”

In refusing to bend any further, Obama’s gambit could either break the GOP’s will, or it could backfire spectacularly if he fails to hold his ground.

Stay tuned. If deal isn’t struck by New Year’s Day, the stakes go sky high.

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