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Let’s start with the stark reality: Second presidential terms rarely result in major accomplishments. Presidents have few new ideas that have not been posed in their first two years, and already met with success or failure. They are lame ducks facing increasing pressure from their own bases, who are convinced that with the excuse of reelection gone, they can now fulfill their wish lists; when it doesn’t work that way, the bases become angry and disappointed. And second-term presidents face even more obduracy from the opposition, bitter at a second loss of the big prize. Occasionally, though, a president is able to accomplish a major policy advance in his second term. The last, best example was Ronald Reagan’s bipartisan tax reform of 1986—and that is exactly the model Obama should follow.
Any achievements in tax reform won’t be easy; much, of course, depends on what happens in the congressional elections. The Republican majority in the House is certain to be more conservative in the 113th Congress than it is in the 112th—hard as that is to believe. The primary defeat two weeks ago of Jean Schmidt, a hard-line conservative, by a Tea Party insurgent, will send a message to a raft of House Republicans: Beware of a challenge from your right. This will push them from hard-right to super-hard-right. For John Boehner, it will be a nightmare, with no ability on his part to stray from the lunatic fringe without being emasculated by his caucus. That means Obama can forget any chance that he will have a negotiating partner in the Speaker.
And even if one or both houses are in the hands of Democrats, it will not leave Obama free to build on his first two years of strikingly significant policy enactments in any major way. A narrow Democratic majority in the House will immediately be fearful of the usual backlash that occurs in sixth year midterm elections, and some of the new members will be antsy about stepping out with big change. That means the president’s main goal will be to preserve his first-term accomplishments, to keep the Affordable Care Act and Dodd-Frank on track as much as possible, and to make their implementation less rocky.
“Ronald Reagan’s bipartisan tax reform of 1986… is exactly the model Obama should follow.” — Norman Ornstein
But this doesn’t mean the president should avoid any thoughts of shooting higher. Not all Senate Republicans will necessarily continue to be Stepford Senators for Mitch McConnell. Lamar Alexander decided to leave the Senate GOP leadership in major part to free himself up to be a dealmaker and problem-solver. He could be joined by colleagues like Bob Corker, Susan Collins, Lisa Murkowski, a reelected Richard Lugar facing his last term, and Scott Brown (if he survives the election), along with conservatives like Mike Crapo, Saxby Chambliss, and Lindsey Graham (on occasion at least) to form a bipartisan coalition to pass some meaningful bipartisan policies—like tax reform and deficit reduction.
What would that look like? There is bipartisan consensus for reducing rates and broadening the tax base, and there might be an opening for something bolder—replacing the payroll tax with a carbon tax, for example, or replacing a major portion of the income tax with a consumption tax. At the same time, Obama will have both an opportunity and a huge crunch point in December—a perfect storm where the expiration of the Bush tax cuts, the expiration of the payroll tax cut, the first big hit with sequesters, and likely the debt ceiling being reached all come together. Inaction would mean a huge blow to GDP and probably a serious new recession. A negotiation out of it could involve a longer term deficit reduction plan. Any combination of the above, unlikely but far from implausible, would break the mold of typical second terms.
Norman Ornstein is a resident scholar at AEI.
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