Fiscal cliff talks turn into a game of chicken
With time running out on negotiations over ways to avert the fiscal cliff, Democrats and Republicans are engaging in a game of political chicken.
The critical negotiations over a way to avoid the fiscal cliff are fast turning into a game of chicken.
Shedding his optimistic disposition, House Speaker John Boehner, R-Ohio, summoned reporters Thursday afternoon to declare it was time that President Obama and the Democrats revealed how they intended to cut spending and slow the rate of growth of Medicare and other costly entitlements as part of a Grand Bargain of deficit reduction. “I’ve got to tell you, I’m disappointed in where we are and what has happened in the last couple of weeks,” Boehner said.
Far from seeking common ground to avert a year end calamity of automatic tax hikes and spending cuts that could trigger another recession, the Democrats and Republicans appear to be trying to escort each other over the fiscal cliff. Senior administration officials had a testy meeting yesterday with Boehner and other Republicans that further soured the negotiations, and Obama is hitting the road today for Philadelphia to try to rally voters to his side in the negotiations.
While both sides fear being blamed if a deal isn’t reached before the end of the year, a new poll from CNN/ORC shows that 45 percent of the public would blame congressional Republicans – even though the Democrats control the Senate – while just 34 percent would blame the president.
“Look, the White House clearly realizes that the longer they wait, the more pressure there’s going to be on the Republicans,” said Stan Collender, a budget analyst and expert. “So they’re not rushing to get anything done. And the White House learned from the negotiations over the debt ceiling in August 2011 not to negotiate with itself. So this is a definite change in tactics that seems to be frustrating Republicans to no end.”
There is general agreement that the government should commit to about $4 trillion in savings over the coming decade, which would be achieved through a combination of spending cuts, tax increases and reforms of the federal tax code and entitlement programs. But there is almost no unanimity on how to get there.
Obama’s road map would include $1.6 trillion of new tax revenue and roughly $350 billion to $400 billion of additional savings from Medicare and other health insurance programs. The rest of the savings would largely be achieved by taking credit for the $2.1 trillion of long term savings agreed to in August 2011 as part of a deal to raise the federal debt ceiling by $2.1 trillion to its current $16.4 trillion level, according to Van Hollen. “The president’s plan has that combination of revenue and cuts,” he said. “Speaker Boehner keeps talking about revenues. We’ve never seen a proposal on revenues. Have you?”
Republicans have signaled that they might go along with $800 billion of additional revenue – the amount that Boehner and Obama discussed as part of their secret debt ceiling talks in 2011 – while insisting that the Democrats commit to far greater spending cuts.
The differences flared up yesterday after administration officials conferred behind closed doors with Boehner and Democratic congressional leaders on Capitol Hill. Treasury Secretary Timothy F. Geithner and White House congressional liaison Rob Nabors signaled to the Republicans that the president still intended to seek $1.6 trillion in new taxes over the coming decade, starting with an immediate increase in the rates for the wealthiest 2 percent of Americans, The Washington Post reported.
While the Republicans have indicated they might go along with half that amount of new revenue, they refuse to raise the top rates. Instead, they insist they could generate the revenue by capping the amount taxpayers can claim in deductions and overhauling and simplifying the tax code to make it more efficient, an assertion the Democrats don’t buy.
Moreover, the administration demanded that Congress relinquish control over federal debt levels and approve at least $50 billion in new spending to boost the economy next year as part of an agreement to avert the year-end fiscal cliff, according to the Post.
In return, the president offered to find $400 billion over 10-years in savings from federal health and retirement programs. But those savings would be wiped out, the Republican aides said, by Obama’s proposal to extend a slew of expensive policies, including emergency unemployment benefits and a temporary payroll tax holiday that is now set to expire at the end of the year.
Republicans apparently viewed the offer as a slap in the face, and Boehner at his news conference sharply criticized Democrats for not outlining possible expenditure cuts. Republican leaders stipulated these reductions as part of a “grand bargain,” including additional tax revenues to shrink the deficit over the long term.
With only a few more weeks before the lame duck Congress runs out of time, some lawmakers said yesterday they were dismayed the negotiations aren’t further along. Sen. Jeff B. Sessions of Alabama, the ranking Republican on the Senate Budget Committee, said, “I can’t imagine the president of the United States at this late date isn’t willing to say what he thinks and what his vision for America is. He has not discussed the $16 trillion debt. He will not tell the American people they’re on an unsustainable path.”
Senate Finance Committee Chairman Max Baucus, D-Mont., said, “We’re going to have to get together. There isn’t a lot of time left. It’s negotiating time, it’s good faith time, it’s getting this done time, that’s number one. Because that’s what the American people want, the markets want some predictability and certainty. This is a no brainer. People have got to get together.”
Eric Pianin is the Washington Editor at The Fiscal Times. Subscribe to The Fiscal Times' FREE newsletter.
More from The Fiscal Times:
- Your Easy-to-Use Guide to the Fiscal Cliff
- Read Between the Lines of the Fiscal Cliff Players
- The Myth of Being ‘Rich’ at $250,000 a Year
We will not truly be free until the last politician is strangled with the entrails of the last banker.
Look, government can cut spending but then raise the debt ceiling to borrow more money....where is the logic behind this? Even if they balanced the budget, there is still a matter of 16 trillion dollars of national debt that has to be paid back with interest. Our government will always spend more than it earns in tax revenue because it can't control the massive spending that is out of control.
We would already be Greece if not for the dollar being the Worlds reserve currency.
This is what you get when you put some guy that never had a real job in the real world that's nothing but a smooth talker first 4 yr's of bull and a bunch of fools to back him up now another 4 yr's of giving away the country to blood suckers, IF IT WAS ME I WOULD CUT EVERY THING, BIG BIRD WOULD HAVE TO WORK FOR SEED NOT 375,OOO A YR
And on the other side, truth be told, the Dems WANT us to go off the fiscal cliff, because they get most of what they want, namely higher taxes on EVERYBODY and defense cuts. At the same time, with the cooperation of MSM, they'll be able to pretend they didn't want to go off the cliff, and lay the blame for all of it firmly at the feet of the House Repubs. Howard Dean said it himself on MSNBC on Thurs night...
"I make the argument that going off the -- as you call it the curb, I call it the slope, the press calls it the cliff, is actually the best deal progressive Democrats are going to get. And here's why. One, we get the Clinton tax rates on everybody. Will it cause a problem? Yes. There will be a short recession, and it will be painful. But two, we get defense cuts. Republicans are never going to agree to that. And three, there are some human services cuts, which we're not going to like. But it's the least possible damage."
"So, I think the fiscal curb, as you call it, is the best deal that progressive Democrats are going to get. And I think it's the best deal in the long run, not the short run."
Who cares? Go "Over the cliff". It doesn't matter. At least we will have a baseline number for companies to budget from. Currently, there is not one. The companies don't know what to budget for.
All we are going to do is cause another rating cut because it will be shown we can not balance a budget.
Copyright © 2013 Microsoft. All rights reserved.
Quotes are real-time for NASDAQ, NYSE and AMEX. See delay times for other exchanges.
Fundamental company data and historical chart data provided by Thomson Reuters (click for restrictions). Real-time quotes provided by BATS Exchange. Real-time index quotes and delayed quotes supplied by Interactive Data Real-Time Services. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by SIX Financial Information.
Breaking up big banks is an untested solution to the too big to fail problem that attempts to isolate and dismantle large, troubled institutions while protecting the rest of the economy.
VIDEO ON MSN MONEY
More Market News
|There’s a problem getting this information right now. Please try again later.|