I have in the past been as critical of White House negotiating strategy as anyone, but I think the president's critics are all wrong about the fiscal cliff deal both on negotiating tactics and outcomes. One wonders if any of the critics have ever negotiated a large, complex transaction. Their comments suggest they have not.
Let us dissect the negotiation and the outcome. The president indeed had leverage on tax rates because all the Bush tax cuts (BTCs) were set to expire, he had just won a stunning reelection victory and the public was strongly behind his position. (One could argue that the entire policy of cutting taxes for the middle class is wrong... that is a different matter since everyone appeared to support the middle-class tax cuts.)
Had tax rates been the only consideration, the president could and would have held firm on the levels. But, as in the 2010 lame duck, the president had other key matters that Republicans cared nothing about -- e.g., unemployment insurance for two million people, earned income tax credit and wind energy subsidies, just to name a few. Moreover, the president was constrained by his campaign position that taxes on 98 percent would not increase, so that he could not start, say, at $150,000 and bargain his way up to $250,000.
Hence, as the president pushed for provisions that matter in real-time to real people, he gave (not caved) on the threshold for tax-rate increases. (Since so many senators from both parties are millionaires themselves, the give on the threshold for the estate tax was, sad-to-say, a foregone conclusion, but it was a minor victory to get a 40 percent instead of a 35 percent tax rate.)
Here are some of the other benefits the president achieved on behalf of the American people: the child tax credit, the college tuition credit, the Alternative Minimum Tax was permanently fixed to inflation (helping middle class families), and the "doc fix" for physicians caring for Medicare patients. The Farm Bill was also passed so that milk does not become $8/gallon overnight.
The wind industry was facing loss of subsidy that would have priced wind-generated electricity out of the market. That, too, was restored, as was the earned income tax credit.
Much like the NeoCon chickenhawks who urge the country to wars but never volunteer themselves, not a single critic, in Congress or out, would have suffered as the unemployed without unemployment insurance had the president not negotiated this deal.
Moreover, no earned benefit (let us stop calling them "entitlements") was touched.
Coming out of this deal, the president still has the dollar-for-dollar defense and domestic agency cuts to negotiate before the meat-axe approach is taken. There are other sources for tax revenues to make up what was left on the cutting room floor, such as the "Buffet Rule," closing offshore tax havens, and instituting a minimum tax on worldwide corporate profits.
If one were to fault the president's negotiating tactics, it would be on this: It is baffling why he a priori foreclosed using his constitutional power under the 14th Amendment that commands that the nation's obligations be paid as a remedy for the debt-ceiling, regardless of whether he actually intends to exercise that power.
He need not have said anything or he could have said, borrowing jargon from the Iran sanctions program, "everything is on the table." As I proposed long before the prior debt-ceiling fiasco occurred, on this matter, silence is golden.
With that exception, not only did the White House play its cards well tactically, the results were about as good as what could be achieved. They even removed the obscenity of Congress receiving a pay raise.
We "muddled through." Much was gained for key vulnerable constituencies, and little was relinquished. In a pluralistic society and in a democracy, "muddling through" is the more likely outcome than grand designs or bargains.