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SHADOW PRESIDENT UPDATE

Leadership Almost Falls Over the Cliff

Dr. andsersonBarack Obama presented himself as, and seemed to represent, transformational leadership - the type of leadership that would inspire members of government and citizens alike in working together toward fulfilling a vision of a "Unified America." Obama seemed to be the president who would be the role model for unity and cooperation in accomplishing goals impacting the nation. President Obama and Republican members of Congress have done the opposite, and have exhibited poor cooperation and compromise in trying to strike a budget deal that would allow the nation to avert the dreaded fiscal cliff (scheduled tax increases and spending cuts that threatened to put the nation on the brink of another recession).

President Obama's first task in his new term centered on hashing out a budget deal with members of Congress in a timely fashion to avert the fiscal cliff. New Year's Day was the deadline, yet a deal was not reached until 11:00 p.m. New Year's night. 151 Republicans opposed the bill that passed which prevented an increase in tax rates for middle class Americans. The bill also delayed the more than $100 billion in spending cuts that would have adversely impacted an already struggling economy.

Consumers and investors were on pins and needles for months as the president and Congress displayed poor negotiating skills, while increasing uncertainty and faith in the ability of politicians to compromise for the greater good of the American people. Leadership's poor negotiating during this time helped reinforce the feeling among many citizens that Washington politics is beset by egomaniacs and gridlock.

Both the U. S. President and Republican members of Congress seemed all too prepared to let the nation "fall over the cliff" rather than displaying the type of rational, sound, cooperative, and compromising leadership leading to the facilitation of a budget deal allowing the nation to move forward towards sound economic recovery. Obama set the stage where he would publicly blame Congress if the country went over the cliff, while Republicans pointed to the president as being a dogmatic negotiator unwilling to compromise. Obama projected an "all or nothing" attitude in negotiations well up to the 11:00 p.m. hour on New Year's night. Many see Obama to be a poor negotiator unable to make a deal.

Obama campaigned that he would raise taxes on households earning more than $250,000 per year. It was not until the pathetic negotiations went well past the desired deadline that Obama conceded to raising taxes on households earning $450,000 per year. This concession by the President irked many liberal Democrats who felt he did not press Republicans hard enough for additional revenue. Republican House Speaker, John Boehner, was seen to have a weak hand in negotiations with the president; yet many Republicans feel he was too quick to cede ground on tax increases without demanding enough relative to significant spending cuts. The deal which was reached can be looked at as a band-aid for a gaping economic wound because it provided no long term solution to the deficit.

The White House and Congress have to meet to negotiate before the sequester. The remaining $88 billion in spending cuts is scheduled to kick on 3/1/2013. The poor negotiation that resulted in the last minute budget deal will be on display again soon as the White House and Congress will meet on raising the debt ceiling. Only Congress can authorize the raising of the debt ceiling which currently stands at $16.394 trillion. If the debt ceiling is not adjusted, the current administration, which is spending more money than it takes in, will not be able to pay its bills.

According to Obama, Congressional refusal to raise the debt ceiling will have consequences on the overall global economy far outweighing the impact of a fiscal cliff. Republicans maintain that a raise in the debt ceiling would have to be matched by spending cuts and reforms exceeding the amount of the increase. Also looming is the threat of the first government shutdown since the 1990s. Congress only agreed to fund the government through 3/27/2013. Many government employees could be furloughed. The United States economy is still in a hole. Leadership allowed the nation to approach the "edge" of the cliff. Sadly, future negotiations will more than likely follow the same path.

Dr. Matthew Anderson
Shadow President

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