Make way for messy budget talks

Tax rates for the wealthy move into focus as congressional leaders meet next week to tackle the fiscal cliff.

By Kim Peterson Nov 9, 2012 3:26PM
Image: Dollar bills floating over U.S. Capitol -- CorbisNow that the election is over, how will Democrats and Republicans move forward in the face of major economic turbulence ahead?

We don't exactly know yet. But both sides are dancing, dropping hints about their strategy. The real work will get started next week, when President Obama is set to begin talks with Senate Majority Leader Harry Reid and House Speaker John Boehner.

The most immediate issue on the table? Whether to raise taxes on the wealthiest Americans, either by hiking the 35% top-tier rate or finding another way, such as closing some tax loopholes.

The dealmaking is going to be messy, no doubt, and most of it will probably be kept out of the spotlight. Obama and Boehner have already agreed to speak carefully in public in order to leave plenty of room for private negotiations, CNN reports. But something must happen, because no deal means that come January, Bush-era tax cuts will expire and massive spending cuts will also kick in.

Lawmakers don't have much time to figure out how to resolve the so-called fiscal cliff. And that's why Obama and Boehner staked out some starting positions Friday, but also pledged to work together to find common ground.

For Obama, that meant insisting on tax hikes for the wealthy, defined as families making $250,000 or more. "We have to combine spending cuts with revenue, and that means asking the wealthiest Americans to pay a little more in taxes," he said Friday at the White House.

He stressed that the results of Tuesday's election mean he has somewhat of a green light from the American people. "Tuesday night, we found out that the majority of Americans agreed with my approach," he said.

But Boehner argued that raising taxes on the wealthiest Americans will hurt, because more than half of them own small businesses. "Raising tax rates will slow down our ability to create the jobs that everyone says they want," he said.

So are we in for more fruitless head-butting and pointless histrionics? Maybe not. The New York Times sees three reasons that good compromise might actually be reached:
  • Some retiring lawmakers and recently defeated Republicans may be more willing to reach a deal, since they're headed out of office anyway.
  • After getting thumped in this week's elections, Republicans may be open to compromise.
  • Democrats sense a window of opportunity on immigration, and want to close this economic issue quickly to move to that hot potato.
And so far, Obama and Boehner have emphasized a willingness to deal. "I'm not wedded to every detail of my plan," Obama said. "I'm open to compromise. I'm open to new ideas."

That was encouraging to some Republicans. "I think he did extend the olive branch, if you will," said Rep. Scott Garrett (R-N.J.), on CNBC Friday.

Boehner struck a conciliatory tone as well. "I don't want to box myself in," he said. "I don't want to box anybody else in. I think it's important for us to come to an agreement with the president. But this is his opportunity to lead."

Kent Conrad, a retiring Democratic senator from North Dakota, said on Bloomberg Television Friday that he could see a basic budget framework laid out over the rest of the year in Congress' lame-duck session.

"I'm absolutely confident that working together, we could put together a platform, a strategy, a plan, during this lame duck," he said. "I really am quite optimistic."

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9Comments
Nov 10, 2012 2:21PM
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Well the welfare mentality on wall street thinking that the tax payer will bailout them again is stupid. Short sells should not be allowed ! Wall street should not have margin buys at all ! They should be cash and carry only.. The Glass Steagal act should be put back in place ! The too big to fail mantra on banks should be broken up ! The FEDs should raise int rates to 1.5% at the fed window on wall street! Stop all teh qe1, qe2 , qe3 BS NOW.. If wall street falls let the free market system rule the strong lives the weak die.. Thats the way wall street should be today .THATS CAPITALISM ..The Bush tax cuts expiring will only bring the rates to where they were ! They were to create jobs from the rich right? WELL a decade latter and guess what no jobs by the so called job creators ! If tax cuts work ? We would have unemployment at 2% TODAY.. THE FISCAL CLIFF NEEDS TO COME AND CONGRESS SHOULD not raise THE DEBT LIMIT! THAT WILL PUT THE BREAKS ON THE FEDS RUNNING THE PRINTING PRESSES FOR WALL STREETS FREE MONEY! And Congress out of control spending .And stop the devaluation of the US$ . Its time for wall street AND CONGRESS to live within its means like the rest of America. 16 trillion was good enough for 2012 ! It truly good enough for 2013.. Thats why they call it a debt LIMIT people ! Do not listen to the pundits on the news and wall street pukes ! They just hate the thought of using their money!!!! And living in a truly free market ! What we have today on wall street is socialized wall street looking for a government bailout at every turn! Thats and this the way they have ran is NOT CAPITALISM folks its pure socialism on wall street! READ YOUR CONSTITUTION PEOPLE ! CONGRESS IS THE ONLY POWER TO TAX AND SPEND . ITS IN THE US CONSTITUTION READ IT YOU IDIOTS... TAKE A CIVICS CLASS AND LEARN AMERICA... STOP BELIEVING THE B.S.FROM FOX NEWS AND ALL THE OTHER IDIOTS OUT THERE..
Nov 10, 2012 2:20PM
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Ted Nugent A has been rocker who is a total useless fool that lives on 40 yr old songs. YO Ted you can leave the USA anytime ! I will even kick you in the a$$ as you leave ! Oh ya i will take your hat too ! What a useless POS !!!
Nov 9, 2012 7:31PM
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A heck of a note--our new POTUS  really isn't NEW, is he?  He's the same old, same old---punish the successful....reduce initiative,.....toss more crumbs (welfare) and tax, tax, tax!

 

Maybe the house of cards should go ahead & fall!  We'll all be going down anyway at some

point under this lying---manipulative--weak leader----his way or the highway---let him stew and fail on his own!

Does anyone even care?  NOPE!  You can bet not  the 14.8m union workers, the 46+ milion on food stamps ...or the in-tank media who abandoned "journalistic reporting"....all of whom got hm re-elected & won't care a bit if America goes belly up under Dear ol' Barry!

Nov 9, 2012 7:09PM
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The American People
Have Spoken.
The Almighty God
Will Answer!

WAKE UP AMERICA

Before the Fire 
And Brimstone 
Begins To Fall
Nov 9, 2012 7:07PM
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Politicians - They fight and we go over a fiscal cliff.

 

They reach agreement  we get higher taxes, which creates more unemployment, and entitlement cuts gets the unwashed out in the streets smashing windows.

 

Time to pack the parachute either way. Gravity sucks.

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