Fiscal Cliff: As Bush Tax Cuts Expire, Obama Second Term Calls For Real Change

When CNN announced that Obama won Ohio, a sudden burst of cheers echoed all around the capital. Students attending DC schools rushed to the White House to congregate and commemorate the pivotal moment, while some political junkies remained glued to their screens wondering when Romney would concede, or whether he would push for recounts. The capital has been labelled as the most liberal city in America by Gallup, and was the first city below the Mason-Dixon Line to legalize same-sex marriage. Watching a Democratic president remain in leadership and stellar progressive senators gain seats in Congress made for a great night in DC.

Nonetheless, after all the festivities and victory speeches, it’s time to sit down and break down what the next administration needs to address. Was this election a game-changer, or will the next administration maintain the status quo?

The answer is a little bit of both.

On the game changer side, Obama easily won the youth vote, 67 to 30%, and the youth vote was decisive in many swing states. Although Obama didn’t directly address millennial voters as much during this election, these results proved that the youth momentum built in 2008 was not a temporary impact but a significant long-term loyal group of voters.

Likewise, after 32 straight defeats at the ballot box, same sex-marriage has not only been legalized in four states, but also gained representation in Congress thanks to the victory of Senator Tammy Baldwin — the first openly gay U.S. senator.

On another note, marijuana was also legalized in two states (Washington and Colorado) creating an interesting battle between federal regulations and the sovereignty of states. Even though marijuana is legalized in these two states, it remains illegal federally. The Department of Justice released a statement saying that their “reinforcement of the Controlled Substances Act remains unchanged.” Marijuana is still listed as a Schedule One drug under the Controlled Substances Act.

When it comes to the status quo, though Democrats gained two more seats in Senate (with now-Senator Warren defeating Scott Brown, and now-Senator McCaskill defeating Todd Akin) the House of Representatives still has a Republican majority.

The Republicans have a natural advantage in House elections based on districts drawn in 2010, since most districts are drawn to have a distinct majority in one party or candidate before the race. The result is the wasted vote effect, in which votes for the opposition are considered losing and the votes for the incumbent are considered superfluous since the race is predetermined. Therefore, the House was set to remain the same before the actual elections. The same gridlock remains in Congress. If the Republican Party continues to play itself as the full force opposition party, there will be little cooperation, and any pivotal change will be unlikely. 

However, the status quo may actually favor Obama.

During the presidential race, Romney promised the country 12 million new jobs. However, macroeconomic advisors have already projected 11.8 million jobs from 2012 to 2016. Therefore, Obama will be the natural beneficiary of the upcoming economic growth, something that is not only good for his political capital, but good for the public if things remain the same.

Nonetheless, policies are still needed to promote high revenue gains and low spending to prevent further steps toward the “fiscal cliff.” There’s a need for a balanced solution between taxes and spending. The Budget Control Act of 2011 has already projected to cut spending at least $1.2 trillion over the next 10 years. The revenue piece of the ratio needs to be addressed and increased as well.

To what, exactly? Most likely, Obama would have to push for a budget similar to the Simpson-Bowles. However, the battle remains in which entitlement programs should be cut and what would be the most effective way to gain revenue in tax reforms. The advantage Democrats get is that by January, when the Bush tax cuts expire, Democrats will get the opportunity to draft their own plan to cut taxes for the middle class and raises taxes for the upper class making $250,000 or more. There is still hope that Republicans will finally jump on board.

There have been some game-changing moments and propositions passed in this election, but the struggle remains in unification of both parties for progressive solutions. The goal for the next administration is create effective bipartisan efforts in fixing the economy while including those affected most by the policies in the conversation.