President Obama, during a brief statement to the press just now, said Harry Reid and Mitch McConnell are in the process of working out a deal to avert the “fiscal cliff” tax hikes, and pronounced himself optimistic about the talks. The key to Obama’s statement, though, is that he spelled out the political reality Republican leaders will be left facing if a deal is not reached:
Senators Reid and McConnell are working on such an agreement as we speak. But if an agreement isn’t reached in time between Senator Reid and Senator McConnell, then I will urge Senator Reid to bring to the floor a basic package for an up or down vote, one that protects the middle class from an income tax hike, extends the vital lifeline of unemployment insurance to two million Americans looking for a job, and lays the groundwork for future cooperation on more economic growth and deficit reduction. I believe such a proposal could pass both houses with bipartisan majorities, as long as those leaders allow it to actually come to a vote. If members of the House and Senate want to vote No, they can.
The key word there is “majorities.” Obama is demanding that Mitch McConnell allow a straight up-or-down vote on Harry Reid’s fallback proposal, if the two sides cannot reach a deal. If no deal is reached, Obama is daring McConnell to filibuster a continued tax cut for the middle class and daring Boehner not to hold a vote on it.
A senior Senate Dem aide tells me that the fallback proposal Reid is working on would extend tax cuts on income just up to $250,000, not up to $400,000, as Obama’s most recent compromise proposal did. What this means is that if Senate Republican leaders fail to agree with Senate Dems on a proposal, the fallback plan Reid will offer will essentially rescind Obama’s offer to raise the income threshold to $400,000.
It’s possible, as many commentators are speculating, that today’s machinations mean Reid and McConnell really may reach a deal. But if not, by daring Republicans one last time to refuse to allow simple majority votes on extending the middle class tax cuts, Obama is signaling that if we do go over the cliff, he intends to extract maximum political pain for it.