THE BLOG
11/26/2012 03:30 pm ET Updated Jan 26, 2013

The Election and the Fiscal Cliff

Leaving the nation's capital shortly after the 2012 election and spending a week in a far-away place (Hawaii) watching no television, listening to no radio and only glancing at newspaper and Internet headlines is good for mental and physical health and political perspective. But returning to a fiscal cliff that we will either crash into or fall off of is a rude return to reality. So, what to make of the election and its implications for the budget negotiations?

First, the basics: Barack Obama was reelected president, the Democrats gained two seats in their Senate caucus and the GOP maintained a solid, if diminished, majority in the House. Without rehashing the spin, it is clear that the Democrats out-performed their expectations going into the campaign and the GOP underperformed theirs.

At the beginning of the year the GOP had high hopes of winning the Senate. Instead, they fielded some flawed, if not bizarre, candidates, defeated no incumbent Democrats and find themselves in a weakened position. And the GOP, especially Minority Leader McConnell, is now caught between the need to compromise on increased revenue to avoid the fiscal cliff and the threat of a right wing primary challenge in 2014. The Democrats are in a position to demand GOP concessions in the "lame duck" session or to use a GOP filibuster to justify curbing the filibuster at the start of the next session when Senate rules can be passed by a simple majority. This should be fun to watch.

In the presidential contest the popular vote was relatively close (2.9 million votes) due to a drop in the president's vote in non-swing states of just over ten percent but a swing state reduction of less than five percent. Governor Mitt Romney actually received some two million fewer votes than Senator McCain received in 2008. The president won the electoral vote easily (332-206). There may be signs of an increasing structural advantage in the Electoral College for the Democrats. Obama has received over 300 electoral votes in both contests while George W. Bush never exceeded 286. Indeed, this 2004 number was based on a 50.73 percent share of the popular vote while the president received 332 based on only a 50.5 percent share. In any event, the president is in a strong negotiating position to hold out for higher taxes for upper income groups based on his campaign positions and the fact that the Bush tax cuts will all expire at the end of the year.

The House results were the least surprising, with the GOP majority being reduced only seven or eight seats. But there is a curiosity here also. Total Democratic votes for House candidates exceeded GOP votes by over one half million. This GOP advantage is not due to any Constitutional multiplier such as the Electoral College, but to plain gerrymandering. Until the Democrats can take back state governor and legislature positions, especially in states such as Virginia, Pennsylvania, Texas and Florida, the GOP will maintain this advantage. But the House GOP and especially their leadership will face severe pressure from the Tea Party wing not to compromise on taxes and will be looking out for primary challenges in 2014. Pity Speaker John Boehner.

Thus, while the election has changed the political dynamic, it is unclear whether it has made a budget compromise more likely. If there is to be a compromise the GOP will have to abandon its opposition to raising revenue, even if done by slight-of-hand. And they will have to give more than they almost offered in the summer of 2011 during the last debt ceiling debate. How they handle this challenge may presage the GOP's future course, either toward moderation or right wing orthodoxy.

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