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We all know that he gave up the leverage of the Bush Tax Cuts, well the 16% of them, making permanent the rest (can we now call them the Obama tax cuts now?) while punting on the sequester trigger cuts for two months, the ol' kick the can down the road maneuver that congress loves.  And no deal was made on the debt ceiling either which should be up in early March as well - so Pres has sailed us into the perfect storm of GOP hostage taking.  

Or did he?  

American attention spans and memories are fruit fly short, so what deal was passed today will be meaningless come March.  That is important because just like the GOP isn't talking about these tax cuts being part of the deal where the trillion plus was already cut during the original debt ceiling hostage deal - today's deal will not really factor into the debt ceiling/sequester deal - that deal will be for better or worse be treated as a stand alone.  

Now the GOP thinks they have all the leverage now because the Pres is known to cave, and did so spectacularly last debt ceiling hostage taking.  And they're being emboldened by promises from McConnell and other GOP leadership that they'll get theirs come the next manufactured crisis if they hold their nose and pass this now.  

But another issue to consider is that the GOP talks about needing deep cuts always in the abstract - never specifics.  However with the fiscal cliff deal passed today, it takes away a lot of the cover they would have had "passing the balanced deal" or grand bargain.  Now the GOP will have to lay bare their demands on the hostage taking - they'll have to come out and say "We want to cut Social Security, Medicare and Medicaid by x amount or we crash the economy".  They need to lay it plain - no obfuscation, no hiding or camouflaging their desires, muddying the waters on the issues of the moment.  

The issue will be  - Raise the debt ceiling or America defaults and economy crashes.  GOP will say "We will not raise debt ceiling unless there is corresponding cuts".  

Here is where the issue will be won or lost for us - Who has to name the cuts.  The GOP will try the "we say we need cuts to appease us, you find the $1.3T we demand" but if the WH says "You are holding the debt ceiling hostage - you name the cuts you want specifically" - who will blink first.  Can the GOP, with no tax or revenue issue to hide under, no grand bargain offered to demand cuts as part of the larger package - are they willing to say "We demand you cut SS, Medicare and Medicaid by $1T or the economy as a whole gets it"?

Now Pres Obama will likely offer his "grand bargain" again where he'll agree to entitlement changes - but will make demands of his own, either for more revenues and/or stimulus spending now.  

Also with the sequester punted to the same time as the debt ceiling, that's near $1T in spending cuts packaged right there - can the GOP demand cuts while at the same time voting to not have the sequester happen.  Ie the sequester walls off entitlement and veteran cuts but still cuts near a trillion dollars - so the GOP will have to say - at the same time - $1T in walled off sequester cuts are bad, but we need to make $1T cuts elsewhere.

Does the GOP think they have more leverage because they don't think Obama and Dems can go back and ask more from the rich folks?  Will the GOP try and whine about "the rich say their rate go up, we need to cut SS now instead of closing loopholes in the tax code that allow the rich to not really pay their 39% they're supposed to".  This deal was about setting the rate to Clinton levels, the next deal will be about closing loopholes to see that folks in the 39% bracket have to pay the full 39% - that will not seem like too much to ask in the court of public opinion.  Rich folk loopholes are not popular amongst the vast majority of the population - The Buffet Rule could come back to the forefront.  GOP will still be trapped fighting to cut entitlements rather than closing tax avoidance loopholes.  

It will all depend on who is forced to name the cuts.  IF WH and Dems force the GOP to name their desired cuts - will the GOP have the gumption to say out loud how they want to make major cuts to the entitlements?

No leverage was lost or gained by the deal today.  Whoever has the leverage will depend on who is forced to name the cuts demanded by the GOP.  Pres Obama could cave there, or he could not - but the deal passed today will not have any bearing on what he does in two months time.  The WH and Dems still have huge leverage if they choose to take it.  

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