From Special Report with Bret Baier | Wednesday, August 22, 2012
On the “fiscal cliff”: the upcoming expiration of the Bush tax rates and the massive budgets cuts in discretionary spending:
I must say I feel a strange equanimity about this cliff. I’d like to get my shorts in a twist, but I can’t make myself, because there are only two options — either Obama wins or Romney wins in November.
So if Obama wins, Elmendorf’s warning is a useful one. Everybody knows that if nothing happens we’re going to go over a cliff and have a recession.
So assume Obama wins. He doesn’t want to have a recession, he doesn’t want to have a worse economy starting off a second term than he had in the first. Assuming the Republicans retain the House, which is a good assumption, he’s going to have to come to a compromise exactly like the kind he did after the shellacking he took in 2010 where he and McConnell worked out a deal.
If Romney wins he will simply announce on the day after he is elected that if the problem isn’t solved in the lame duck [congressional session], he will — as soon as he gets in office — reverse retroactively everything that happens on January 1.
Now this does assume that Republicans win the Senate. If Romney wins the White House he will likely win the Senate, although we have a Missouri Akin issue….If you have enough [votes] to win the presidency, you probably have enough to win 51 seats in the Senate. So he will announce a retroactive undoing of all this stuff — a six-month extension while they work out real Ryan-like tax reform and entitlement reform.
I sleep well at night.
On if this equanimity only applies to a Romney victory in the election:
No, either way. Yes [I will sleep better if Romney wins], but about other issues. But as to the cliff, either way, if Romney or Obama are elected we do not go over a cliff.
On the likelihood of Obama working with the Republican-controlled House of Representatives:
Because if the House Republicans sit on their hands — and you can’t enact anything unless they agree — then Obama is going to have what Elmendorf has just reported, a crash in the economy, nine percent unemployment, a second recession. Obama does not want to start a second term with a ruined economy. It makes no sense. He will work out the same kind of deal he worked out with McConnell in 2010…
But won’t Obama have a mandate if he wins?
Under our constitutional system, he is not a dictator. He can’t enact a mandate unless the House agrees. If the Republicans hold the House — as they held in 2011– he can’t act without the Republicans and therefore he will have to work out a compromise as he did with Mitch McConnell…
You don’t need Ambien.