According to the normal rules of politics, Republicans should have very little bargaining power at this point. With Democrats holding the White House and the Senate, the G.O.P. can’t pass legislation; and since the biggest progressive policy priority of recent years, health reform, is already law, Republicans wouldn’t seem to have many bargaining chips.But the G.O.P. retains the power to destroy, in particular by refusing to raise the debt limit — which could cause a financial crisis. And Republicans have made it clear that they plan to use their destructive power to extract major policy concessions.Now, the president has said that he won’t negotiate on that basis, and rightly so. Threatening to hurt tens of millions of innocent victims unless you get your way — which is what the G.O.P. strategy boils down to — shouldn’t be treated as a legitimate political tactic.But will Mr. Obama stick to his anti-blackmail position as the moment of truth approaches? He blinked during the 2011 debt limit confrontation. And the last few days of the fiscal cliff negotiations were also marked by a clear unwillingness on his part to let the deadline expire. Since the consequences of a missed deadline on the debt limit would potentially be much worse, this bodes ill for administration resolve in the clinch.So, as I said, in a tactical sense the fiscal cliff ended in a modest victory for the White House. But that victory could all too easily turn into defeat in just a few weeks.
And it was Obama's "blinking" that set up this victory in the first place, of course, but Krugman won't say that. We'll see where the debt fight goes, but with Republicans saying "We'll wreck the economy unless we get to wreck X and blame Obama for it" and President Obama replying with "the hell you will" I'm betting on the guy with the winning streak for the last 4 years.