President Obama is taking a commendably robust approach to the upcoming negotiations with congressional Republicans about averting the so-called fiscal cliff—a combination of tax hikes and spending cuts due to come into effect on January 1st if no agreement can be reached to avert them. In a meeting with progressive supporters at the White House on Tuesday, Obama said he would insist on restoring tax rates for the wealthy to their pre-2001 levels, and wouldn’t accept any agreement that extended the Bush giveaways to the rich for a second time. (At the end of 2010, they were extended for two years.) “I am not going to budge,” Obama said, according to a report in the Huffington Post. “I said in 2010 that I’m going to do this once, and I meant it.”

This was a distinct change in tone from Obama’s comments immediately after the election, when he said, “I am not wedded to every detail of my plan. I am open to compromise.” Now Obama is making clear that one detail he is wedded to is changing the top rate from thirty-five per cent, where it’s been for the past twelve years, to 39.6 per cent, which was the rate Bill Clinton introduced in 1993. At his press conference on Wednesday, he called on Congress to pass a law extending the Bush tax cuts for those earning less than $250,000 a year, about ninety-eight per cent of Americans, but allowing the rate cuts for the top income brackets to expire. “We should not hold the middle class hostage while we debate tax cuts for the wealthy,” he said. “We should at least do what we agree on, and that’s to keep middle-class taxes lower. And I’ll bring everyone in to sign it right away so we can give folks some certainty before the holiday season.”

As Treasury Secretary Tim Geithner explained on Tuesday, the Administration doesn’t believe that simply eliminating some of the tax breaks that rich people enjoy without raising the top rate—an idea proposed by Mitt Romney and seemingly endorsed by House Speaker John Boehner—will raise enough revenue to put the budget deficit on a sustainable path. “There’s a lot of magical thinking about how much you can raise from tax expenditures to do enough to restore fiscal sustainability and not adding to the burden on middle-class Americans,” he said at a conference in Washington. In his press conference, Obama repeated this point, saying “the math tends not to work,” but also stressed that the election had given him a mandate to restore the top tax rates to their pre-Bush levels:

If there was one thing that everybody understood was a big difference between myself and Mr. Romney, it was, when it comes to how we reduce our deficit, I argued for a balanced, responsible approach, and part of that included making sure that the wealthiest Americans pay a little bit more. I think every voter out there understood that that was an important debate, and the majority of voters agreed with me, not—by the way, more voters agreed with me on this issue than voted for me. So we’ve got a clear majority of the American people who recognize if we’re going to be serious about deficit reduction, we’ve got to do it in a balanced way.

I’m with Obama and Geithner, and not just because of the revenue argument, which is perfectly accurate. (As the non-partisan Tax Policy Center repeatedly pointed out during the campaign, it is very difficult to raise large sums of money by simply eliminating tax breaks.) The larger point is that cutting taxes for the rich didn’t work. Back in 2001, Bush’s rationale for cutting the top rates on income, and in cutting the rates on dividends and capital gains, was that it would spur capital investment, job creation, and growth. It didn’t happen. During the past twelve years, rates of all three have been substantially lower than they were under Clinton, when tax rates were higher. (This is even true if you ignore the post-2008 period—when the economy has been suffering the after-effects of a bust in asset prices—and concentrate on 2000 to 2008.)

Fiscal discipline, equity, and economic experience all point toward a return to the top tax rates of the Clinton era. In order to get there, though, Obama is going to have to demonstrate that he is willing to leap off the fiscal cliff, and that he isn’t bluffing. Anything short of an ironclad commitment to let all the Bush tax cuts, including the ones that affect the middle class, expire on December 31st if an agreement isn’t reached, will be exploited by the Republicans, who otherwise don’t have many cards to play.

Basically, this is an exercise in brinksmanship—the logic of which is well understood. If Obama’s threat is perceived to be credible, he almost certainly won’t have to go through with it. But if the Republicans think he is likely to back down—as he did in 2010, when he initially opposed extending the Bush tax cuts—they will stonewall, figuring that the White House, at the last minute, will offer them a compromise along the lines Boehner is suggesting. Don’t forget, this is a G.O.P. that hasn’t agreed to a rise in tax rates for more than twenty years. In the current House of Representatives, all but six of the two-hundred-and-forty-two Republicans have signed Grover Norquist’s pledge “to oppose any and all efforts to increase the marginal income tax rates for individuals and/or businesses.”

In order to overcome Republican obstructionism, Obama must indeed be willing to go over the cliff, allowing the tax cuts to expire and the automatic spending cuts, which were agreed upon during the last go-around with the Republicans, in the summer of 2011, to go into effect. As I’ve argued elsewhere, such an outcome would be far from disastrous. The spending cuts are relatively minor—roughly a hundred billion dollars in 2013, out of a total federal budget of $3.8 trillion—and half of them would fall upon the Pentagon budget, which needs trimming. The tax hikes, which would affect everybody, are potentially more serious to the economy’s health. Amounting to roughly $400 billion in 2013, they would involve a fiscal tightening of about 2.7 per cent of G.D.P., which could conceivably bring on another recession. But in all likelihood that wouldn’t happen. Once the new Congress meets in late January, the Administration could introduce a bill to restore the tax cuts to low, middle, and upper-middle income households, which the incoming class of Republicans would surely be obliged support. (As members of a tax-cutting party, what alternative would they have?) The new tax cuts would offset the expiry of the old ones, and the overall impact on the economy would probably be relatively minor.

In the language of game theory, it’s all a matter of backward induction. As long as the Republicans believe Obama isn’t bluffing, they are caught in a bind. Effectively, their options are agreeing now to extend the majority of the Bush tax cuts, but not the ones applying to the rich; or agreeing to reinstate them later. Boehner and his colleagues would probably plump for the first option, believing they will be able to extract some valuable concessions from Obama in return, such as an agreement to curb entitlement spending. But has Obama given the Republicans sufficient reason to believe he won’t eventually roll over?