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The President is bluffing
Keith Hennessey ^ | 11/28/2012 | Keith Hennessey

Posted on 11/28/2012 9:50:22 AM PST by SeekAndFind

I think the President is bluffing on his veto threat.

Conventional wisdom: To achieve his desired fiscal policy outcome (big tax rate increases on the rich), the President is willing to risk tax increases on all income tax filers. He is also willing to risk the political blame for middle class Americans paying higher taxes because he thinks he can shift most of the political blame onto Republicans. He is therefore willing to veto a bill he doesn’t like and bear the consequences of having no bill, if that’s what is needed to gain negotiating leverage. His veto threat is credible.

This conventional wisdom makes three key assumptions.

1. The President’s top economic policy priority is his fiscalpolicy goal (raising taxes on the rich).

2. In a veto / no bill / blame game scenario, the President can shift most of the political blame to Republicans.

3. He will make his veto decision on these two bases: fiscal policy and relative political blame.

Key flaw in the conventional wisdom: The President’s veto decision is not about tax increases or political blame; it’s about causing a recession in 2013.

I make different assumptions.

1. If there is no bill, the U.S. economy will probably dip into recession for much/most/all of 2013, and it’s impossible to predict whether such a recession would be short-lived.

2. A 2013 recession would be terrible for the country and terrible for the Obama Presidency. It would limit the President’s options across his entire policy agenda, economic and non-economic. And it could define and dominate his entire second term.

3. President Obama believes #1 and #2, and therefore avoiding the risk of triggering a recession with his veto is an even higher policy priority than his fiscal policy goal.

4. The President wants to get things done. He cares more about his own chances for policy success (across the entire breadth of his agenda, whenever he figures out what it is) than he cares about relative political blame. A scenario in which Republicans get most of the blame for a veto-triggered recession is still a loser for him if it means he can’t accomplish his second term goals.

If my assumptions are correct, then the President cannot afford to veto a bill and have no compromise enacted. Even if doing so increases dramatically the chance of getting his top fiscal policy priority, and even if he would bear only a small portion of the political blame for a legislative failure and the pain of broad-based tax increases, his veto would trigger a recession that would severely damage his agenda at least in 2013.

President Obama’s veto threat decision is not just about fiscal policy, and it’s not just about who gets blamed for a legislative failure. It’s about whether the President wants to cause a recession in 2013 and hamstring his second term. No matter what he or his advisors say, he cannot afford to take that risk.


TOPICS: Business/Economy; Government; Politics
KEYWORDS: budget; fiscalcliff; obama

1 posted on 11/28/2012 9:50:30 AM PST by SeekAndFind
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To: SeekAndFind

Once “The Rich” are taxed and it does not help, what is he going to do next?

“The Poor” will HAVE TO BE TAXED eventually

and those on Welfare? Remember what socialism always leads to - FORCED LABOR


2 posted on 11/28/2012 9:53:56 AM PST by Mr. K (some days even my lucky rocketship underpants don't help...)
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To: SeekAndFind

Actually, the pResident Re-Elect runs the risk of pushing his game too far. We conservatives know what he wants and what he’ll do to get it. His constituents have been, as planned, pre-programmed to blame anything ‘rich’ or anything Republican, or Tea-Party.

He can push and he can bellow and he can bluster about ‘veto this’ and ‘veto that’. If the remaining bravehearts in the House remain resolute, he’ll blame us. This really isn’t likely to happen - we won’t stand resolute because our side is filled with lilly livers and spineless jellyfish.

In this regard then what should happen is for him to get everything. Bleed the rich, steal the freedoms, and regulate the economy into financial oblivion. If we’re careful to let him get what he wants, he’ll push too far and there won’t be any economic engine to support all his constituents’ habits. That’s when the zombie scenarios start.


3 posted on 11/28/2012 9:55:53 AM PST by Gaffer
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To: Mr. K

There isn’t enough discipline and control in this government to ‘control’ - only to destroy. His wanting constituents will roam like the zombies we see on TV


4 posted on 11/28/2012 9:57:17 AM PST by Gaffer
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To: SeekAndFind

Bring on the collapse. The sooner the better.


5 posted on 11/28/2012 10:02:57 AM PST by SampleMan (Feral Humans are the refuse of socialism.)
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To: SeekAndFind

Doesn’t matter.

A wind blown piece of dandelion seed would blow over brainless Boehner and his squadron of eunochs.

Nothing will happen until CW-II.


6 posted on 11/28/2012 10:09:38 AM PST by Da Coyote
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To: SeekAndFind

Obama&Co desired fiscal policy is to spread the wealth from the top down.
First the stimulus game now the tax game and always use the blame card,socialism starts from the to down.
By the time they are done with all their regulations income will be flat lined,four years of fear to ensue.


7 posted on 11/28/2012 10:14:34 AM PST by Vaduz
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To: SeekAndFind

Call his bluff. Do it. Let’s go over the cliff.


8 posted on 11/28/2012 10:16:50 AM PST by Qwackertoo (Going into Politic Free Zone Momma Grizzly hibernation for a while after this week, maybe forever.)
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To: Qwackertoo

Do it. nobama voters will suffer the most (i.e., the clueless, the dimwits, the zombies). Do it and let chips fall where they may.


9 posted on 11/28/2012 10:21:50 AM PST by hal ogen (First Amendment or Reeducation Camp?)
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To: SeekAndFind

The solution for the Repubs is so easy, of course they’ll never do it: just pass a bill in the House to make the Bush tax cuts permanent and then go home. Just have a press conference and say, “the GOP stands for never raising taxes on anyone anytime, we’ve passed a bill in the House, until the Senate acts on that bill, there’s nothing to discuss, we’re going home”.


10 posted on 11/28/2012 10:21:59 AM PST by Behind the Blue Wall
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To: Mr. K
He will steal the 401k’s and IRA’s from working Americans and put it into his obama stash and redistribute it to the welfare industry.

LLS

11 posted on 11/28/2012 10:22:59 AM PST by LibLieSlayer (WOLVERINES!)
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To: Gaffer
This really isn’t likely to happen - we won’t stand resolute because our side is filled with lilly livers and spineless jellyfish.

The republicans being the responsible people they are will keep bending in order to save the union and avoid catastrophic losses for the American people. The hero always sacrifices himself for the greater good. And Obama knows it.

We are at a major turning point in history. Just like the revolution or the civil war. Except our leader is the villain and not the hero.

We are in a constitutional crisis right now. Let's see if the house will step up to it's responsibility.

12 posted on 11/28/2012 10:40:18 AM PST by oldbrowser (Welcome to U.S.Zimbabwe)
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To: SeekAndFind

Let it all fall apart. The people voted for obama and his failed policies, let them have what they asked for...damn them all to hell!


13 posted on 11/28/2012 12:18:22 PM PST by pgkdan (We are witnessing the modern sack of Rome. The barbarians have taken over.)
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To: SeekAndFind

!


14 posted on 11/28/2012 12:21:17 PM PST by skinkinthegrass (Anger a Conservative by telling a lie; Anger a Liberal by telling the truth....RWR 8-)
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To: SeekAndFind

Vote present, let the dems own it


15 posted on 11/28/2012 12:37:02 PM PST by VTenigma
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To: Mr. K
Once “The Rich” are taxed and it does not help, what is he going to do next?

Answer: DOUBLE-DOWN

They won't admit a flaw in their logic - only a flaw with the implementation. To wit: "we didn't raise taxes enough - last time..."

16 posted on 11/28/2012 12:42:34 PM PST by jonno (Having an opinion is not the same as having the answer...)
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To: LibLieSlayer
He will steal the 401k’s and IRA’s from working Americans and put it into his obama stash and redistribute it to the welfare industry.

If he's willing to go down in history as the biggest thief of all time why would he stop and not touch the retired's funds? He could nationalize the banks, S&Ls, and brokerage firms. Loot all the private assets and replace them with brand spanking new issue 2%Treasury IOU-Bonds. Good bye IRA, good bye 401K, 403B, IRA, savings account &c, &c. He's already siphoned 3/4 trillion dollars out of Medicare, who going to stop him?

His "financial adviser", George Soros, once came within a pennyweight of destroying the British Pound and bankrupting their economy, do you think Obummer would do any less?

G

17 posted on 11/28/2012 3:23:53 PM PST by Gandalf_The_Gray (I live in my own little world, I like it 'cuz they know me here.)
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To: Gandalf_The_Gray
Absolutely. The left and dims have held not only hearings in the Senate but have also held seminars at the main auditorium at the Department of Labor and discussed merging IRA’s and 401K’s into government run annuities. These bastards are communists and 25% of the rat drones love that fact and the other 75% of rat drones do not believe that they are communists... because they are too damned miseducated to know one when they see one... like every time that they look into a mirror.

LLS

18 posted on 11/28/2012 5:39:31 PM PST by LibLieSlayer (WOLVERINES!)
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To: SeekAndFind

Obama, aided and abetted by the MSM, have successfully triangulated the GOP into a cannot win situation. Four years of it is Bush’s fault and class warfare against big business has made the GOP brand poison. If by some miracle the GOP grows a set and accomplishes a deal that does not raise taxes, Obama will veto the bill. He is newly re-elected, is protected by the media, so he has nothing to lose.


19 posted on 11/28/2012 6:16:35 PM PST by buckalfa (Nabob of Negativity)
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To: Qwackertoo

Going over the cliff is explained as going back to the Clinton years spending and tax policies. I thought all the libs swooned over Bubba’s time at the helm, now they are telling me Dubbya’s tax cuts are crucical to the middle class? So in other words they are saying middle class prosperty is Bush’s fault. Confusing isn’t it?


20 posted on 11/29/2012 5:21:48 AM PST by BTCM (Death and destruction is the only treaty Muslims comprehend.)
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To: BTCM

Yup, I’ve told many a mouthy lib sure lets go back to Clinton tax rates WHEN you’re ready to go back to Clinton spending rates. They have no response back to that. Stops them in their tracks usually. They just want the more taxes.


21 posted on 11/29/2012 5:31:29 AM PST by Qwackertoo (Going into Politic Free Zone Momma Grizzly hibernation for a while after this week, maybe forever.)
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