The first signs that Republicans may be willing to compromise
with re-elected United States President Barack Obama emerged
early this week, an encouraging sign after two years of an
acrimonious deadlock of policy showdowns.
House of Representatives Republican Speaker John A. Boehner
dished out some bitter medicine to his fellow House
Republicans following their electoral battering last week.
Reports this week suggested that members were chastened by
the result in which the Republican Party went backwards in
support across even its own grass roots supporters.
The party which pinned so much on regaining the presidency,
and spent so much on television advertising attacking Mr
Obama personally and electorally, got caned in the final
polls. Mr Obama squeaked home in Florida but the complex
electoral system meant that he gained all of the Electoral
College votes from that state. He won in states the
Republicans were sure were theirs for the taking. The Tea
Party candidates, those calling the loudest for a reduction
in government, were hit hardest.
Mr Obama was the first to offer an olive branch of
conciliation, saying he was willing to make some concessions
as long as the final fiscal bargain was properly balanced
between new tax revenue and spending cuts: "I'm not wedded to
every detail of my plan. I'm open to compromise," he said
three days after his re-election.
At the same time, he encouraged Congress - the combination of
the House of Representatives and the Senate, which is
controlled by Democrats - to quickly pass an extension of the
existing lower rates for those making under $US250,000 even
while the broader negotiations took place.
Mr Boehner will need to capitalise on the chastened faction
of the House Republicans that want to cut a deal to avert
sudden tax increases and across-the-board spending cuts that
will be automatically triggered on January 1 if no compromise
There is still a reluctance by Republicans to shift more of
the tax burden to wealthy Americans.
While calling for the generation of new federal revenue to
offset the deficit, Mr Boehner has been less than specific on
what his goal might be for raising new federal tax dollars.
Suggestions of closing loopholes and limiting deductions will
only go so far when North America's deficit as a percentage
of gross domestic product (GDP) is close to 100%.
Any agreement to avert a fiscal crisis in January now
revolves around the definition of tax increases. Mr Boehner
is holding the line against any increase in tax rates, even
for the richest Americans, who currently are in the 33% tax
bracket. But he is leaving open the possibility of a tax
overhaul that raises more revenue than the existing code.
Mr Obama seems to have an ace up his sleeve in the coming
tense negotiations. Treasury Secretary Timothy Geithner long
ago said he would depart after one term.
Jacob Lew, Mr Obama's current White House chief of staff and
former budget director, is said to be the prime candidate to
replace Mr Geithner. For the foreseeable future, the holder
of the job as Treasury Secretary is likely to be at the
centre of budget negotiations and Mr Lew has experience in
such bargaining, dating back to his work as a senior adviser
to Congressional Democrats 30 years ago in bipartisan talks
with President Ronald Reagan. There is also talk about
bringing in Republicans and business executives to help
rebuild bridges in both camps.
Some Republicans appear ready to accede, but others see a
different message. Republicans representing staunchly
conservative districts see no reason to give in, even if the
nation as a whole sided with the president on taxes.
A majority of Americans thought it was fine to raise taxes on
higher-income people but those staunchly conservative
Republicans now say that was an emotional response to
personal pain and of wanting someone else to pay for their
Whether the US, as a nation, can avoid the so-called fiscal
cliff will depend not only on whether Mr Boehner can find
common cause with a newly re-elected, invigorated president,
but whether he can deliver his own caucus.