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Economy

John Sivolella: If the GOP majority in the House is blamed for failing to reach agreement, it will descend into minority status for a decade or more – as will, perhaps, the party itself. This Nov. 16, 2012 file photo shows House Speaker John Boehner of Ohio and President Barack Obama speaking to reporters in the Roosevelt Room of the White House. (Carolyn Kaster/AP, File)

As the lame-duck Congress returns from Thanksgiving recess this week, the nation will begin to find out what, if anything, the GOP learned from the debacle that was the 2012 election.

This moment in history is unique for the GOP because it’s in a position to provide instant feedback to the electorate about whether and how it intends to evolve. Their only real business prior to the New Year is working with President Obama and their Democratic congressional colleagues to avoid the $580 billion (equivalent to 5.1 percent of GDP) “fiscal cliff” and near-certain double-dip recession. And, yes, increases in tax revenue — along with cuts to popular entitlement programs – are on the table.

Now that the nation’s proverbial economic back is up against the wall, GOP leadership must work in good faith towards an innovative solution while staying true to fiscally conservative principles — something it’s struggled with mightily in the past.

[A]fter years of kicking the can down the road, both sides have real incentive to cooperate to avoid the fiscal cliff.

Republicans feathered their electoral bed with a no-new-tax pledge, buoyed as they’ve been for over 20 years by activists like Grover Norquist and, more recently, by the party’s newest conservative activists — Tea Party freshmen — many of whom still see little room for negotiating higher taxes.

Problem is: This message didn’t resonate with voters in the recent election. Exit polls indicated that Obama’s drum-beat that wealthier Americans should pay more in taxes seemed to take with a majority of the electorate. There was hope in those polls for Republicans, though, as voters also agreed that the federal government was too big.

In seminal negotiations of this type between branches in divided government, modern history tells us that the president often holds many of the cards. The results can be disastrous for a House majority that doesn’t read the electorate correctly when it is negotiating.

Newt Gingrich, for example, fumbled away the promise of the Republican Revolution of 1994 when he was blamed for overstepping in negotiations with President Bill Clinton, leading to a shutdown of the federal government. Far from rallying the electorate around a new way of doing business in Washington, the embarrassing gridlock turned people off – and they took it out on the GOP.

Any such effect will only be magnified this time around. Obama’s approval ratings now stand at 54 percent. His campaign manager suggested shortly after the election that Obama may remain in pseudo-election mode, touring the country and adapting his grassroots-mobilizing advantage to sell his fiscal-cliff negotiating positions.

House Speaker John Boehner, in contrast, lacks a bully pulpit and must work to unify his caucus while minimizing fissures within his party. He must also contend with the fact that Congress remains unpopular, and voters in 2012 lacked confidence in the GOP’s willingness and ability to fix the economy.

The solution for the GOP lies somewhere along the path Boehner is currently pursuing — avoiding the cliff for another six months to a year, and tying the postponement to a framework for further negotiation on both comprehensive tax code and entitlement reform. These issues won’t be solved by New Year’s Eve, but a framework to bridge negotiations is within reach — and is in the best interests of the Republican party.

Now that the nation’s proverbial economic back is up against the wall, GOP leadership must work in good faith towards an innovative solution while staying true to fiscally conservative principles — something it’s struggled with mightily in the past.

The GOP lost the tax-revenue battle on Nov. 6th – and Obama maintains that he will not agree to a framework that does not include some form of tax increase. The challenge for GOP leadership is to interject forward-thinking tax policy reform while working to achieve milestones on the spending side, like restructuring Medicare and, perhaps, Social Security. These entitlement areas remain fraught with political danger, however, so Republicans must tread cautiously.

Washington may be dysfunctional, but it retains enough of a survival instinct to know when to get a deal done. That’s where it is now — after years of kicking the can down the road, both sides have real incentive to cooperate to avoid the fiscal cliff. Being blamed for failure to reach agreement would ensure a failed presidency for President Obama and eliminate any pretense he has of attaining the liberal policy goals he’s outlined for his second term. If the GOP majority in the House were to be blamed it would descend into minority status for a decade or more – as would, perhaps, the party itself.

The sooner the GOP defines itself for 2014 and 2016, the better. This historic policy negotiation is the first step.

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