Hidden risks for Obama and Democrats in 'fiscal cliff' drama

FILE: Nov. 14, 2012: President Obama gesturing while answering a question during a news conference in the East Room of the White House. (AP)

“I think we are all aware that we have some urgent business to do,” President Obama said last Friday as congressional leaders sat down with him to discuss a deal to avoid the fast-approaching “fiscal cliff.”

From a political standpoint, the conventional Washington wisdom is that it is more urgent for Republicans to make a deal than Democrats.

Republicans can no longer say they are waiting for increased bargaining leverage that will come after winning the November election, gaining control of the Senate and the White House.

That game is over and they lost.

Without a deal by the Dec. 31 deadline, Republicans will be subject to public contempt for allowing taxes to go up on everyone — not just the rich.

The hidden side of the budget negotiation drama is the mounting pressure on President Obama and Democrats to make a deal.

And grassroots Republican will also hold GOP lawmakers responsible for allowing Democrats to lock them into a deal for large, automatic defense cuts if there is no deal by the deadline.

But there is more to this political story.

It is getting little attention from a political press that assumes the newly reelected president has the upper hand.

But the hidden side of the budget negotiation drama is the mounting pressure on President Obama and Democrats to make a deal.

Keep in mind President Obama just won a second term and Democrats in the House and Senate picked up seats by promoting themselves as the best defense against Republicans who only care about cutting taxes for the wealthy at the expense of programs that help the poor.

Democrats also featured campaign advertising that attacked Republican House budget committee chairman Paul Ryan, the vice presidential candidate, for his proposals that “ended Medicare as we know it.”

There were the ads featuring the hidden camera video of Mitt Romney disparaging “47 percent” of Americans as government dependents, people happy to live off of entitlements.

If the fiscal talks break down now, how can President Obama and his fellow Democrats ask seniors and middle class workers to accept major cuts in the nation’s social safety net programs?

That is the outcome they promised to stop the GOP from executing.

And how will the president explain to small business the widely predicted economic slowdown that may result from harsh automatic cuts in government spending? Without a deal, Obama’s second-term agenda, beginning with immigration reform, will be lost in a sea of economic fear.

Overall $54 billion will be cut from non-defense programs for 2013 alone without a new budget deal under automatic spending cuts or “sequestration.” These cuts include programs that millions of Americans depend on in their daily lives.

This is why in a Nov. 13 press conference, House Democratic Leader Nancy Pelosi told reporters, “I want you to be disabused of any nation that there is any widespread thought that it would be a good thing, for our country, for us to go over the cliff. We want an agreement.”

She is predicting a deal before Christmas.

Senate Majority Leader Harry Reid said a deal will be sealed long before Dec. 31st without last-minute “brinksmanship.”

Before his Friday meeting with congressional leaders the president held meetings with major Democratic constituencies. They included big unions representing middle class workers, from hotel service employees to teachers. He also met with liberal activists from MoveOn.org and the National Committee to Protect Medicare and Social Security.

Those groups are worried that with no more campaigns ahead of him the President may abandon them by agreeing to big cuts in entitlement spending to get a deal with the GOP.

For starters, if Republicans — arm-in-arm with Democrats — go tumbling over the cliff, taxes will be raised on Americans in all income brackets, not just the wealthy. Small businesses will also see a sudden increase in their taxes and that will push up unemployment.

And while Social Security, Medicaid, veteran’s benefits and federal pensions are exempt from budget cuts if there is no deal, there are a lot of other social programs that will get hit hard.

For example, the federal emergency unemployment compensation program will expire.

It will save the government $26 billion but in doing so, it ends payments to millions of Americans who are without jobs and have used up benefits at the state level.

Medicare payments to doctors will be slashed by 27 percent, just under $11 billion, because Congress has not passed the “Doc Fix” to prevent them from happening.

The Leadership Council of Aging Organizations reports that seniors will be hit particularly hard if there is no deal,.

Almost two million seniors will lose their in-home personal care, as $12.6 million will cut programs providing caregivers to the elderly.

Programs that deliver meals, transportation and care to 345,000 Americans over the age of 60 are also on the chopping block.

Yet, there are some influential liberals who think that going over the cliff would give the Democrats even more leverage to pass a bigger deal that touches all government spending, even Social Security.

As Paul Krugman wrote in the New York Times last week: “It’s worth pointing out that the fiscal cliff isn’t really a cliff … nothing very bad will happen to the economy if agreement isn’t reached until a few weeks or even a few months into 2013. So there’s time to bargain.”

Krugman is betting that investors, consumers and credit rating agencies won’t be spooked by politicians who can only ask for more time while they fail again to stabilize the economy by making a deal.

That is a high-risk bet.

But that kind of thinking is leading to talk of a “bridge” agreement on a small debt reduction package to get past the end-of-the-year deadline. The added time will allow for a “grand bargain” as everyone gets more time to look at big-ticket reforms to the tax code and changes in Medicare benefits.

The GOP is in a bad position in these talks. But Democrats are also at risk until they sign a deal that protects the middle class.

This piece originally appeared in The Hill newspaper and on TheHill.com.