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
...it won't hurt too many people in Congress...... the wealthy will survive it.
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.
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.
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.
Obamanomics - get neighbors to start arguing among themselves while you sneak in and steal their wealth.
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.
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%
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 © 2014 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. 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 Morningstar Inc.
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
[BRIEFING.COM] The stock market finished an upbeat week on a mixed note. The S&P 500 added just over a point, holding its weekly gain at 1.0% while the Nasdaq lost 0.4%.
The major averages began the day on an upbeat note, but relinquished their opening gains during the first 90 minutes of action. The early sentiment was boosted by a better-than-expected nonfarm payrolls report for February (175K versus Briefing.com consensus 163K), but a closer look into the report suggested that ... More
More Market News
|There’s a problem getting this information right now. Please try again later.|
MUST-SEE ON MSN
- Video: Easy DIY smoked meats at home
A charcuterie master shares his process for cold-smoking meat at home.
- Jetpacks about to go mainstream
- Weird things covered by home insurance
- Bing: 70 percent of adults report 'digital eye strain'