The GOP created the fiscal cliff beginning with the "temporary" tax cuts passed in 2001, 2003 and 2004 under the Bush administration, all as purportedly temporary provisions with sunset dates. They hoped that the passage of the tax cuts would, as generally happens when people have more of something they like, lead people to demand making all of the cuts permanent. The result would be a huge tax decrease for the wealthiest taxpayers, and a rather insignificant tax decrease for most Americans.
In many ways, their strategy worked. Most Americans forget that they didn't think they really had to have a cut in income taxes back in 2001, and they don't want to pay more taxes than they are paying now, even a little bit more. And the Great Recession means that for many Americans who are suffering deep financial injury still because of the housing and jobs crisis, every tax dollar saved is a step back to normalcy.
But the tax cuts pushed by the GOP joined together with the tremendous costs of the preemptive wars pushed by the GOP to create a veritable snowballing deficit. Under Bush, we went from surplus in year one, to huge deficits the rest of the time (with much of the impact of the deficit hidden by the purportedly temporary nature of the provisions and the annual passage of an AMT patch that didn't have to be included in the calculation of the deficit until the particular patch was passed). Those two huge drivers of the deficit were treated by the GOP at the time as inconsequential, as GOP stars claimed that "deficits don't matter." See Dick Cheney to Congressional Republicans: don't stop spending, The Oregonian (July 18, 2012) (noting Cheney's current advice to keep spending on the military and retelling the story of Cheney's telling then Treasury secretary O'Neill that "Reagan proved that deficits don't matter").
Part of the right's goal, of course, was to use the increases in deficits that their tax cuts caused as a rationale for "starving the beast"--forcing the Democrats to accept cuts (they of course called them "reforms") to the parts of governnment that the right doesn't like. That meant reduction to the benefits from, and privatization of, Social Security and Medicare and reduction of government employee pensions and maybe, in a far right dream world, the elimination of any federal role in basic research funding, disaster emergency responses, and education. Meanwhile, the right would continue to push for increased spending on the parts of government it likes (military spending, for example--see Cheney's July 2012 admonition to the GOP to keep spending on the military, above) and continued favorable tax subsidies for the wealthy and big corporations (carried interest, domestic manufacturing deduction, etc.) even if that continued to add to the deficit and the debt.
The GOP's tune changed when the flagrant underregulation of the financialized economy (deregulation, of course, having been begun with Reagan and continued for decades now) resulted in the financial crisis that became the Great Recession and then a Democrat was elected president. GOP lawmakers suddenly thought deficits were bad (when they were created by Democratic presidents to respond to crisis). And debt--which had been spiralling upwards under the Bush regime with increases in debt ceiling hardly noticed--suddenly was a monster that must be contained. And all of this could be used by those on the radicalized right every time the debt ceiling had to be increased to extort from those not on the right the right's desired changes in social justice programs.
In other words, the radicalized GOP set the conditions in motion that allowed them to hold us hostage now, through their control of the House of Representatives, in an extortion campaign. In that campaign, they demand that they get the changes to Social Security and Medicare and Medicaid that they want (the so-called "reforms" to so-called "entitlement" programs that amount to the beginning of the unraveling of the New Deal that the right so detests) in exchange for their going along with increases to the debt ceiling that are necessary because of the irresponsible tax and spending policies that they pursued while in office or the measures that were necessary to shore up the financial system when it threatened collapse due to the deregulatory push that has gone on for forty years funded by and supported by the right (and some Dems in the middle as well).
So guess what. We shouldn't be surprised at all to hear today that U.S. House Speaker John Boehner says the GOP rightwingers will maybe agree to some "revenue" increases so long as they get their extortion payments--concessions from liberals that will ultimately lead to the reduction and/or privatization of Social Security and Medicare and other government programs. And of course this is double-speak anyway, since Boehner and his compatriots on the GOP right still ascribe to the frequently disproven market fundamentalism that believes that deregulation and "simplification" (meaning tax cuts) leads to economic growth that automatically results in revenue increases even without tax changes intended to raise more tax monies. As Tiron and Rubin note in the Bloomberg piece reporting on Boehner's statements, his speech "sounded conciliatory and didn't alter the Republican position on tax policy" but "marked the start of political positioning and negotiations over what to do about the so-called fiscal cliff of $607 billion in combined tax increases and spending cuts." He isn't agreeing to tax increases: he just wants to be able to use the kind of manipulative tweaking of the data to get the desired result called "dynamic scoring" that the GOP right has been pushing for decades as a way to "prove" that their deficit-creating tax cuts really aren't costing anything! See Roxana Tiron and Richard Rubin, Boehner Would Accept New Revenue under 'Right Conditions', Bloomberg.com (Nov. 7, 2012).
Boehner called for concessions, stating "The president must be willing to reduce spending and shore up entitlement programs that are the primary drivers of our debt." Id.
Harry Reid (Senate majority leader) said "We're happy to deal with entitlements, but we're not messing with Social Security." It's hard to know for sure what that means--maybe they are willing to reduce Medicaid and Medicare benefits? Too bad he didn't say that we need to expand Obamacare to make it Medicare for all, so that we can get control of health care costs while providing much needed support particularly to the elderly at the end of life. But at least he did say something that should translate to "we are not going to change Social Security."
So the game is on. The GOP intends to continue pushing its same old medicine of tax cuts for the rich and entitlement cuts for the rest of us. I hope the Democrats have gained a little bit of backbone from the election so that they will push for wiser spending on public infrastructure and wiser tax policies in areas from estate and capital gains taxes to corporate subsidies.