Barack Obama did something bizarre on New Year's Eve. While Republican and Democratic Senate leaders were locked in delicate negotiations to prevent America going over the fiscal cliff, the President held a press conference at the White House. We might have expected him to issue a bipartisan call for compromise on taxes and spending - something presidential. Instead, he gave a campaign speech.
There was laughter as he mocked his Republicans critics and applause as he called for higher taxes on the rich. It was a performance aimed not at healing his country's wounds but whipping up his party's base.
In a moment of shameless irony from the Satirist-in-Chief, Obama concluded by saying that America's rulers ''need us all to stay focused on [the people]. Not on politics.'' A cynic might retort, ''Politician, heal thyself.''
The root cause of America's brush with the fiscal cliff is its $US16 trillion ($A15.5 trillion) debt. But the reason why it has teetered so close to the edge is politics.
The cliff itself was partly the product of an arrangement made in 2011 between the parties to defer dealing with the budget problem until a later crisis would compel them to do so. That crisis was a jump in tax rates and a cut in spending scheduled for January 1 this year.
If the parties failed to reach a budget deal before the deadline, the markets would shudder, unemployment benefits would cease for 2.1 million people and nearly everyone would face tax increases.
Inheritance taxes would go through the roof, which prompted financial journalist John Carney to ask if this might encourage relatives to ''pull the plug on grandma'' just before the January 1 deadline. He wrote that, ''Shifting a death from January to December could produce $1.1 million in tax savings'' on an estate worth $3 million. Carney called this ''death elasticity''.
Given how high the stakes were, the level of political leadership was disappointing. Republicans and Democrats engaged in economic brinkmanship as they argued about the right mix of tax increases and spending cuts. After a failed effort to pass a bill through the Republican-controlled House, the battle moved to the Democrat-controlled Senate.
Eventually the Senate settled at a compromise of raising taxes a little and delaying decisions about spending cuts for a further two months.
It was a far cry from the ''grand bargain'' that everyone agrees America sorely needs, and even this was only passed through the Senate two hours after the January 1 deadline.
With all this complex yo-yoing back and forth, it's tempting to blame the crisis on America's system of divided government, which makes it difficult to take big, tough decisions about domestic policy.
Control of Congress is split between the Republicans and Democrats, and even when one party is in control it still needs a substantial majority to pass legislation without getting filibustered.
But the conservatism of the system can be overcome when the political will exists to do so. The problem in this instance is that both parties had a stake in being stubborn.
The Republicans have become enthralled by a Tea Party base that believes they were put on earth to reduce the size of government, so they were reluctant to anger the right by accepting substantial ''recovery killing'' tax rises.
At the very least, the price of surrender on taxes had to be a commitment by the White House to substantial reform of entitlement programs such as Social Security. The problem is that if the Republicans are on this planet to shrink government, many Democrats believe that they are on a holy mission to increase it. We can infer that Obama is one of them.
Republicans came to suspect that they were doomed to lose any budget negotiations with the President because he wasn't really worried about going over the fiscal cliff. He took the crisis as an opportunity to argue that the Republicans were risking the economic health of the nation in defence of low tax rates for the rich, whereas he was simply trying to preserve low rates and unemployment benefits for the middle class.
It's true that Obama offered his own, tepid version of spending cuts, but his priorities are generating growth and financing his social reforms. The proof of that is in the deal thrashed out in the Senate, which most commentators dubbed a ''win'' for the President: it was all about new tax revenues and had little to offer on spending reform. It was also a win because it compelled a Republican leadership to vote for higher taxes for the first time in two decades.
The fracturing of the GOP that will result will set Obama up nicely to push through the rest of his agenda for this year, including immigration reform, climate change regulation and gun control. If the President has failed to offer leadership on debt then it's because he doesn't have to. Let the Republicans be the party of austerity; Obama can be remembered as the President of plenty.
In short, the fiscal cliff has shown that on both sides of the political divide there is a surfeit of ideology and self-interest. The Republicans have evolved from a party of budget balancers to a party that regards talk of a tax increase as a heresy. But the Democrats have become just as philosophically frozen, albeit in a way that has greater political advantages.
Obama is enjoying his moment of glory after last year's election and sees no need to reconfigure his political style. Even though he has nothing to lose by being bipartisan, he continues to campaign tirelessly. The President doesn't seem to understand where the politics ends and the governing begins.
London Daily Telegraph