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.

By The Fiscal Times Nov 30, 2012 5:40PM
By Eric PianinThe Fiscal Times logo

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.

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228Comments
Dec 1, 2012 5:22PM
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If we go through sequestration, it will only hurt the middle class and the poor.
...it won't hurt too many people in Congress...... the wealthy will survive it.

Dec 1, 2012 5:12PM
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Obviously this is all for show.  Obama could give a sh*t.  He's going to Hawaii to golf! 

 

Finally it's time for this idiot that 51% of Amerika elected, to own it. 

 

I can't wait until all the silverbacks in the hood get their benefits slashed. 

I wonder where they'll live after they burn down their government subsidized living quarters. 

Dec 1, 2012 5:07PM
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This country has already gone over the cliff, it is just a matter of how hard we will hit the bottom that congress needs to figure out.
Dec 1, 2012 3:48PM
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Look, I think we should just leave this up to the President.  I mean after all he has helped us get to where we are today.  He had the foresight with the stimulus and the clunkers for cash programs and really all the best economic strategies. Just leave him alone and he'll get us through this.  I think the Republicans ought to just get out of the way and not try to change anything he wants to do.  Really I think a one party system might be best in the future. LOL
Dec 1, 2012 3:42PM
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Chucky12, your obviously under the mind control of right wing wacko's like Fox News or Rush Limbaugh.

Republicans spent 8 years increasing spending an average of 7.7% per year, totaling a 61% increase in spending.

Obama cut that increase down to 1.4% per year, 5 times less than Republican spending, with a 8 year projection of 11%. You can live in a world of low information or mis-information by mind control experts or you can spend five minutes on google and get some factual information before you embarrass yourself with another p!ss poor article.

Dec 1, 2012 3:18PM
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Thank God for the house of representatives!...DO NOT GIVE IN TO THIS SOCIALIST PIG OBAMA!...He wants to keep spending and spending till we are worse than Greece!...I wonder where this MORON will go to live after he has finished ruined our once great country!...Giving Obummer more money is like giving a recovering drug addict more drugs!
Dec 1, 2012 3:17PM
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Why not restore the pre-Bush tax rates for the highest 2% of earners for a negotiated period of time. Both sides can use the time to draw up specific details of a new tax code. It seems as if a deadline is the only way to get both sides to negotiate anyway.
Dec 1, 2012 3:13PM
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How much you want to bet that the can gets kicked down the road again!...Guess I won't be paying any of my debts either!...When the government starts paying their debts, I'll pay mine!...SCREW THEM ALL!
Dec 1, 2012 3:05PM
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Look out politicians...if the Middle Class doesn't receive relief soon, there will be a revolution like no one has seen since 1776!

 

Mark my words now, and if nothing isn't done soon, the Middle Class Rights march on Washington will occur on 08-28-2013.

Dec 1, 2012 3:02PM
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We've already gone off the cliff!...Let's be realistic. There is no cliff!...Just a scare tactic invented by the libtard democrats!...We are now at the bottom of the cliff, now we just need to figure out where to go from here.
Dec 1, 2012 2:53PM
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Obama's ready to sign a bill stopping any tax hikes on the first $250 thousand earned each year by every American. The 2% who earn more than that will have a small increase after the first $250 thousand, Republicans believe this is outrages and un-fair, even though this is a tax cut for 100% of Americans. It's never been more obvious, if your not a 2 percenter, your not even a blip on the GOP radar screen.
Dec 1, 2012 2:49PM
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You know if these unemployable S.O.B. can't get their heads around this we should raise up against Washington DC and run them all out of town. It's more than apparent that they just don't get it. America is very tired of it too. They set up there sucking up their salaries pay by us the tax payer and play with our financial well being like it is some sort of GD game. It's no game they need to get their **** together and do what we hired them to do or fire their asses.
Dec 1, 2012 2:39PM
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Obamanomics - get neighbors to start arguing among themselves while you sneak in and steal their wealth.

Dec 1, 2012 2:20PM
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fiscal cliff just takes us back to the 90s less spending and higher taxes. sounds like a great plan to get us on track to deal with the issues.
Dec 1, 2012 2:15PM
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The lap-dog liberal media will make good & sure that the public, despite the divided gov't in Washington, will BLAME THE REPUBLICANS for whatever impasses that we have developing. Pres. OBlamer's campaign-like speeches that he's giving all over the country - that that media are eating up- will help insure how this is all this is spun to the clueless public.  Let me be the first to let you all know that in 2016, when the economy,inflation & unemployment are two or three times as bad as they are today, that this media & the Democrats will be successfully blaming Pres. Bush for all of the problems that will be occurring!  Liberals say that the Republican party are dinosaurs & are all becoming obsolete, but for the liberals sake, they'd better hope those troglodytes stick around-otherwise who would there be to put the blame on? :-)
Dec 1, 2012 1:17PM
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Some of the best say that the cliff cannot cause a recession because we are already in one. If so, one must remember some sarcasm I put out five years ago: “Negative Interest Rates and Negative Tax Rates will the help in today’s environment (five years ago)” The environment has changed some but no need to change the sarcasm.

Dec 1, 2012 12:52PM
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Final consumption sales tax only - no item or person exempt – When a family goes into a grocery store and buys $100 in groceries and the clerk adds $5 for local tax, $7 for county, $15 for state tax, $35 for federal tax and $45 to pay off the federal debt, the crap will come out of the American peoples head about the cost of government.  Then give the American people the right to directly decide what they are willing to buy through government, (by pass congress). Socialism, liberalism, high government spending will end. In 4 years the American people will reduce government spending by 35% and increase the productivity of our tax dollars by 400%

Dec 1, 2012 12:39PM
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Lets go over the cliff. Then we can see if the Republicans care about the middle class. They will have their automatic cuts. Will they later allow tax cuts for the middle class, or just for the wealthy?
Dec 1, 2012 12:24PM
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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.

 

Dec 1, 2012 12:22PM
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THESE AZZHOLES IN WASHINGTON NEED GROW THE FACK UP NOW
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