Given this weak Republican position, Obama must be tempted by a shiny political object: the destruction of the congressional GOP. He knows that Republicans are forced by the momentum of their ideology to take positions on spending that he can easily demagogue. He is in a good position to humiliate them again — to expose their internal divisions and unpopular policy views. It may even be a chance to discredit and then overturn the House Republican majority, finally reversing his own humiliation in the 2010 midterms.
This has left him with one economic approach: Raise taxes as much as possible, shift the burden to those he doesn’t care about, and do as little as possible to slow spending growth, buying time until he can raise taxes again.
Some conservatives are convinced that this is the full emergence of Obama’s democratic socialism. This explanation is not required. Obama probably still views himself as a pragmatist. He may comfort himself that he will take incremental action on Medicare in due time. But at this moment three factors overlap: his liberal policy instincts, a political opportunity to break his opponents, and the massively inflated self-confidence produced by reelection. So, force the GOP to surrender on the debt limit, with nothing in return. Require Republicans to accept new taxes in exchange for any real spending reductions. If they agree, their caucus is fractured (again). And if they refuse (which they are likely to do), paint them as obstructionists and extremists who are willing to destroy the economy/the nation’s credit rating/the military for their own ideological purposes.
There is one main downside to this approach. It delays any serious action on long-term debt for at least another two (and probably four) years.