COMMENTARY | With the deadline for raising the debt limit three weeks away, Republicans and Democrats -- these led by President Barack Obama -- are seizing on an early opportunity to advance their 2012 election strategy. The political fight over the budget, and the ensuing compromise that will likely arise by Aug. 2, is more than just about reducing the federal deficit and national debt -- it represents a deeply ideological divide on taxes and income redistribution and an opening to define next year's election debate.
Reaching a workable compromise is important. No liberal or conservative lawmaker wants to see the U.S. federal government ultimately defaulting on its obligations. And no American wants to see an ever increasing national debt fatally undermine this country's fiscal ability to spur economic growth and remain competitive in the international arena.
But what appears on the debate's facade is not what lies underneath. On the surface, you have, on one hand, farfetched contentions by President Obama linking the uncertainty of raising the debt limit with job growth. Employers, according to the president, are holding off hiring because of insecurity surrounding the debt ceiling talks. On the other hand, you have more reality, policy-grounded arguments by the Republicans. They worry that raising any taxes -- on anyone -- as a result of any budget compromise would negatively affect an already awfully slow economic recovery and stagnant job market.
Deep down, however, the so-called "grand bargain" is about taxes -- how much taxes to pay and who pays them. Remember the Bush era tax cuts on the "wealthy?" They are up for renewal next year -- that is, during the 2012 presidential election. Everyone on Capitol Hill and at the White House, as well as every GOP presidential candidate, is aware of that.
When those tax cuts expired last year they were extended by President Obama and congressional Republicans who were fresh off victorious 2010 midterm elections. The debate surrounding that extension may have been only a snapshot of 2012. This debt ceiling fight, however, is a warm up to an election battle with deep ideological and strategic undertones. President Obama wants to make the 2012 presidential contest a referendum about 'taxing the rich'.
On the backdrop of a stubbornly slow recovery and amid high unemployment numbers, the voting public -- particularly Republicans and increasingly independents -- are questioning President Obama ability to steward the economy toward growth and job creation. The majority of voters now look at his policies as failure.
President Obama has very few choices left strategically in his re-election bid. His 2012 political strategy is thus simple, yet ideologically deep and somewhat troubling and divisive: those who can afford to pay taxes should pay more of them. We should raise taxes on the rich.
Next year's presidential election is going to be a referendum on taxing the rich. And President Obama has just begun his long campaign for it.
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