Republicans have enough problems dealing with their own internal insurgencies, but it should be explained that their biggest problem in the fiscal slope negotiations is that the public is poised to blame them if things go awry.
Four-in-ten (40%) expect that the president and congressional Republicans will reach a deal by Jan. 1 to prevent automatic tax increases and spending cuts from taking effect; 49% say they will not. If no deal is reached, far more say congressional Republicans would be more to blame (53%) than President Obama (27%). These opinions are virtually unchanged since early November.
That makes it very hard for Republicans to refuse a deal, and strengthens the White House’s hand. If we already know Republicans will be blamed, the pressure is just greater on their side. That partially explains the Boehner offer, which despite being incomplete and often silly, represents a far more moderate pose than, say, the Ryan budget.
This is not to say that Democrats have no pressure to make a deal on their side. While Republicans watch opinion polls, Democrats may be watching leading economic indicators. These show the United States lagging behind the world, as the pessimism over the fiscal slope grows. The latest manufacturing report was the worst in over a year, and signals contraction in that sector. Analysts have lowered their fourth quarter growth reports. Even if you believe that the White House can minimize the effects of the fiscal drag – through managing the sequester smartly at OMB and freezing withholding rates at Treasury – that won’t hold forever, and the ancillary fiscal tightening from the expiration of the payroll tax cut and extended unemployment insurance will be enough to immediately drop GDP. So Democrats, at some level, need to avoid the austerity bomb as well.
On balance, I would say that Republicans have more to fear from this whole thing blowing up. But in general, the public blames the party in power in the White House for prolonged economic dissatisfaction. A late surge of economic positives buoyed the President in the election. An austerity bomb would reverse that eventually.