The dollar fell to a six-week low versus the euro on concerns that agreement won’t be reached. The euro strengthened 0.5 percent to $1.3056 and climbed as high as $1.3075.
Obama Strategy
Obama’s strategy is borne, in part, out of lessons Obama and his advisers take from the failed 2011 attempt to reach a grand bargain on long-term debt reduction.
Obama and Boehner tried to forge a compromise in private talks. Instead of clearing the path, their effort collapsed and served to increase resistance among members of both parties in Congress.
The president’s team, particularly his political advisers, concluded that it was a mistake to stay in Washington instead of campaigning on behalf of his plan. So on Nov. 30, Obama took Air Force One to Pennsylvania, where he spoke at a toy factory on the need for deficit action -- including raising top-income tax rates. His appearances have been tied to campaign-style appeals for support on the Internet.
Democrats Alienated
In 2011, Democratic backers were alienated by Obama’s willingness to offer deep cuts in entitlement programs, such as Medicare and Social Security, without getting Republicans to agree on more revenue from taxes on high-income earners.
Jim Manley, a Democratic strategist and former aide to Senate Majority Leader Harry Reid, said Obama’s team made the mistake of holding on too long to the idea that Boehner and Senate Minority Leader Mitch McConnell would compromise.
“They took that lesson to heart and they’re not going to allow themselves to get suckered into reaching bad agreements to get a deal,” Manley said.
Obama’s allies say the president’s election victory and polls showing a majority of Americans support raising taxes on top earners means he doesn’t have to make the same concessions on entitlements that he did in the summer of 2011.