Republicans might be willing to compromise on raising taxes on wealthy Americans.
"We need to put politics aside. The election is over. President Obama has won," said Republican Senator Saxby Chambliss of Georgia on ABC's "This Week."
After a resounding victory in Tuesday's election, President Obama is spending some of his political capital, standing his ground on one of his most notable campaign promises.
"If we're serious about reducing the deficit, we have to combine spending cuts with revenue -and that means asking the wealthiest Americans to pay a little more in taxes," said Obama in his first weekly address since the election.
"I will not ask students or seniors or middle-class families to pay down the entire deficit while people making over $250,000 aren't asked to pay a dime more in taxes," he continued.
One of the key differences between the economic plans of Obama and Republican challenger Mitt Romney was their tax plans. Obama wants to repeal the Bush-era tax cuts on high-income taxpayers, while Romney wanted to cut taxes across the board, regardless of income.
Even with Romney out of the picture, Obama may still not get his way, as congressional Republicans were just as obstinate over the issue last year, leading to the compromise now known as the "fiscal cliff," a year-end deadline that sees all tax rates rise and slashes spending indiscriminately on nearly all government programs, including education and the military, unless the two parties can come to some kind of budgetary agreement.
Republican House Speaker John Boehner has insisted that revue should only be raised by closing tax loopholes and making spending cuts, not on raising taxes.
But if the Republicans can't compromise, Democrats may simply let the economy go over the cliff.
While payroll taxes will go up immediately, federal taxes don't need to be filed until April, giving the administration time to then lower rates for families making less than $250,000 a year, while leaving the new higher rates in place for wealthier people.
The Republicans would be hard pressed to reject the new measure, which would prevent $3,700 in new taxes on the average family, and Republicans who have sworn never to raise taxes would be in a position to say they are cutting them instead.
Taxes on the wealthy go up, while taxes on the middle class stay the same, and Republicans wriggle out of their no-tax-increase pledge. Everyone's a winner?
Maybe not. While a post-cliff compromise might only take days or weeks, it might take longer, and Tea Party Republicans might dig in their heels on principle.
In addition, the markets won't react well, and we could see a volatile few weeks, even if everything works out in the end. Investors tend to be short-sighted, and markets hate uncertainty.
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