海角大神

With the election behind us I had hoped we鈥檇 get beyond games of chicken. No such luck.

But first you need to understand that the game of chicken聽颈蝉苍鈥檛聽about how much or when we cut the budget deficit. Or even whether the upcoming 鈥渇iscal cliff鈥� poses a danger to the economy.

The non-partisan Congressional Budget Office on Thursday warned that the automatic tax increases and spending cuts scheduled to start in January amount to too much deficit reduction, too soon. They鈥檇 put the economy back into recession, and push unemployment to about 9 percent. But the CBO also warned of an economic crisis ahead if the United States doesn鈥檛 stem the growth of the nation鈥檚 exploding deficit.聽

Get it? Reduce the budget deficit too quickly, and we鈥檙e in trouble. But fail to address the deficit, and we鈥檙e also in trouble.聽聽It鈥檚 really a matter of timing. That鈥檚 why I think any deal should include a trigger mechanism that begins to cut spending and raise taxes when the economy has two consecutive quarters of 6 percent unemployment or less, and 3 percent annualized growth or more.聽聽

In reality, though, the upcoming game of chicken 颈蝉苍鈥檛 about any of this. It鈥檚 over the clearest issue President Obama and Mitt Romney fought over: whether taxes should be raised on the rich.

Democrats and Republicans are now maneuvering to maximize their bargaining leverage when they sit down next year to decide this.

On Friday the President called on called on Congress to immediately make permanent the tax cuts for Americans who make less than $250,000 a year, while at the same time allowing tax rates to rise for wealthy Americans 鈥� and then making those rates part of a broader deal next year.

The President knows congressional Republicans won鈥檛 agree, but he needed to set out his central demand because it鈥檚 the one thing that can fairly be interpreted as a mandate from the election.

So what鈥檚 going to happen? Bear with me, because this gets interesting.

Some Democrats (and some White House strategists) figure they鈥檒l have most bargaining leverage in next year鈥檚 deal if they do nothing now 鈥� allowing tax rates to rise automatically on everyone after the first of the year. Then they plan to offer Republicans a deal that reduces taxes on people earning less than $250,000 鈥� which would be retroactive to January 1^st .

Republicans would have to choose between a tax cut on the middle class or no tax cut at all. Democrats believe Republicans would have to take the deal. Even Grover Norquist would be hard-pressed to come up with an argument against it.

Some Republicans, meanwhile, figure they鈥檒l have more bargaining leverage if they keep things as they are until late January or February.

What鈥檚 magical about late January and February? That鈥檚 when the debt ceiling has to be raised again, which means that鈥檚 when Republicans can once again threaten to vote against raising it. (In theory, we鈥檒l hit the ceiling at the start of January, but the government can juggle payments and take various 鈥渆xtraordinary measures鈥� for another month or two beyond that 鈥� maybe even until March 鈥� before it could no longer be able to borrow enough money to pay its bills.)

This is the thinking behind House Speaker John Boehner鈥檚 proposal earlier Friday that all the tax cuts 鈥� including those for the rich 鈥� should be extended until next year, until there鈥檚 a deal. 鈥淚鈥檓 proposing that we avert the fiscal cliff together in a manner that ensures that 2013 is finally the year that our government comes to grips with the major problems that are facing us,鈥欌�� Boehner said.

So who blinks first? Democrats who don鈥檛 mind going over the cliff because they鈥檒l get a better final deal 鈥� and the deal will be retroactive to January 1^st 聽so it鈥檚 not really a cliff at all but more like a little hill? Or Republicans who want to extend the Bush tax cuts beyond January 1^st , until we get sufficiently close to the debt ceiling that they can once again threaten the full faith and credit of America?

As I said before, I had naively assumed the election would put an end to these games, but obviously not. Yet Obama and the Democrats are holding most of the cards now. Let鈥檚 hope they use them.