According to the Washington Post, President Obama is prepared to veto legislation to block year-end tax hikes and spending cuts, collectively known as the “fiscal cliff,” unless Republicans bow to his demand to raise tax rates for the wealthy.
Obama has never said whether he would allow the country to go over the cliff. If Obama wins re-election, many Republicans will attempt to get the president to ditch his effort to raise rates and instead go for a more sweeping agreement on the country's debt that would, as the Post describes it, include "significant new tax revenue."
Should President Obama win reelection, Democrats pumped up on an Obama victory would resist compromise on the top rate, a point of partisan contention since it fell from 39.6 percent to 35 percent more than a decade ago as part of a package of tax cuts signed by President George W. Bush.
Strategists on Capitol Hill are also gaming out a Romney victory, which could also prove complicated. Romney has called for legislation to maintain the Bush tax rates for people at all income levels through 2013 to give the new administration time to craft its own tax and spending plans.
The House has already passed such legislation, as well as a bill to replace scheduled Pentagon cuts with cuts to food stamps and other social programs. If Obama continued during the lame-duck session of Congress to block those measures, with or without the help of Senate Democrats, Republicans could simply revive them in January, after Romney takes office.
But undoing the tax increases after the fact could prove difficult. Republican tax aides note that, once tax rates rise, any move to lower them again would increase the budget deficit, creating procedural as well as political problems.
Even if Republicans take control of the Senate, they have little hope of winning a 60-vote majority. And they would be unable to use a fast-track procedure known as reconciliation to protect a deficit-raising tax bill from a Democratic filibuster.