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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Nov 30, 2012 11:13PM
You all talk big about Mr. Obama's spending , but you wise sucker, Bush handed trillion of dollars in a fake platter, and you ate the 10.8 trillion dollar dinner that the 2 wars produced. You paid  with 720 billions in the reconstruction of Iraq. Bush VP made a fortune with stock in war manufacturing hardware, hundred of large Scale manufacture's made billions in war transportation trucks, and equipment that could not protect against the explosions of Iraq home made road detonation grenades, and equipment.. Bush did not pay for any of it, all of it was charged  to the USA credit card, to include the prescription help for seniors that Bush did not pay for it either, costing  nearly 800 billions. Now, Mr. Obama comes in and rescues the USA from the deepest hole, and to save the country needed to spent 2.1 trillion, and all of you accused the President of over spending. Why don't you all take a walk, learn that your former  president Bush nearly make the USA another Rome. You al should get in touch with Bush and offer him a match to start the burning of the USA he started, and because of him, and Boehner, Ryan, Cantor, the country is in a mess that Obama is trying to correct! Get the rich to pay tax, and there will not be a Fiscal Cliff, nor a Budget deficit in 2 years.
Nov 30, 2012 11:10PM
If we are putting it all on the table,Why don't we start with all  lawmakers excessive benefits, lifetime healthcare, lifetime pensions these Cadillac plans payed with tax dollars have to be a big chunk of tax money  over their lifetimes. Not to mention salaries of $179,000 for nine days of work per month. Lets start there.
Nov 30, 2012 11:07PM

They're going to blame this on the Republicans because they don't want to get off their lazy asses and go get a job.

Nov 30, 2012 11:06PM
The takers and feeders elected Obama.  They don't care about anything but eating for free.
Nov 30, 2012 10:50PM

Boehner, we the Democrats, and million of conscientious Republican, and Independents will remember you for ever as the indolent persistent blocker of progress for our country, and we will work hard in the next elections in 2014, to kick you out of the House of Representatives. We will pursue this task with all our heart. Our prime future agenda is to consolidate our efforts to get you fast ejected in the next elections out of a job you did not know how to do efficiently, you did not earned it, and you do not deserved it as an American! We will make you invisible by jerking you out to never return because have done so much damaged to the American people, you destroyed  our credit ratings during the Budget Ceiling discussions  by so much indolent opposition against the president Obama. Unfortunately, for the people of America your negative actions quickly ricochet against the middle class, stopping their opportunity for job creations, better economics future, and less poverty. We still do not understand, and cannot mentally accept a man's in your position to work for America, to be so weak and wrong leading this mass of incoherent Tea Party nuts, and Republican members put there by the people to supposedly work for the people benefits, and for the people gains only, and not for monetary growth, and big publicity names in the House of Representatives. You made yourself a detestable inhuman, with no bipartisan abilities at all. We deeply feel sick just by listening to your bully unaccomplished voice always commanding nothing but despair, no jobs, no presidential Bills passed, only future poverty, and anti -health opposition for the citizens. You need to be put out of your job quickly to save America, and we can hardly wait for the next elections to do it! You and all of you have put us through misery, poverty, and no jobs, you have discredited our USA credit ratings by not wanting to increase the Debt Ceiling, but you kissed the rear of Bush, and increased the debt ceiling many times with no scruples or hesitation, it was because you adore this Republican man of poor and devastating presidential performance as worthless and reckless, just like yours!

Nov 30, 2012 10:36PM
I wonder if the Hostess bakers will get 99 weeks unemployment?
Nov 30, 2012 10:27PM
Quoting from another Forum.

 We will not truly be free until the last politician is strangled with the entrails of the last banker.

Nov 30, 2012 10:18PM
I don't remember the name of this movie, but a guy would challenge all the cool guys to play chicken at night, at the top of the cliff. He always won. No one could figure it out.  It turns out that the guy had a big mirror, he would put across the road and the other guy was playing chicken with his own headlights, and would turn and go off the cliff. So when you play chicken make sure you look for mirrors. LOL
Nov 30, 2012 10:02PM
Here,here I agree.Lets go off the cliff.The economy needs it,inherent value is way overblown and it is time for a major correction.What happened in 08 was peanuts.Suffering now?...You wait :)
Nov 30, 2012 9:51PM
This "hyped up fiscal cliff" comming at the end of December is important, but it is like a mosquito biting an elephants back compared to what is comming shortly, The U.S. dollar has been trusted as the worlds currency,  our dollar is the gold standard which allows us to print as much money as we want and not have to "pay the piper",  this will be comming to an end, Watch the bond market, which allows forgien countries to buy our debt. What is not being reported to the American people is that these countries are cutting way back on their purchases, because they know we are printing "worthless money" fresh off the presses, and if nobody buys our bonds the bond market will crash, but, but, a saviour has has swooped in and saved us,  the feds printing presses,  If the world wont buy our bonds, the U.S. will print fake money and buy them back ourselves which is happenning as we speak, Do your math and be prepared people
Nov 30, 2012 9:29PM

In times of high unemployment, the debt should be considered as a minor problem. In times of a slowly improving economy; the tax hikes will not hurt that much. And if the spending cuts take place; everyone should be cheering. What? No Takers? Obama doesn’t need votes anymore. The Senate doesn’t care; nothing of value will reach them. Everyone should be proud; none on the Representatives broke their promises. But there might be a push for 435 new house members in two years. It looks like Obama wants to work as if the Cliff was reached and how to cure it.

Nov 30, 2012 9:18PM
Obama is a liar, he not only wants the rich to pay more, but the hard working man who is planning their future, only to help the lazy pieces of crap in this country to have what hard working  Americans have, shame on all you who voted this piece of work back into office!!!!!!!
Nov 30, 2012 9:17PM
Stop!  It makes not one difference who does this or that.  It is done.  It is history. Why bother with this other than having fun with it on any blog access.  This nonsense has been going on for years and it will continue.  Our Constitution is broken and irretriveable.  We are what we asked for and so stop the analysis.  Let's just live with and smile. 
Nov 30, 2012 9:16PM
Screw it, lets go off the cliff!
It raises revenues dramatically, and slashes spending on the military and entitlements just as drastically. 
Someone has to pay for the mess the Bush and Obama got us into. Why should it have to be our kids and grandkids. Lets tighten out belts and suck it up and get it done now.
Nov 30, 2012 9:06PM
The game of chicken started with the KGB, and if you get the ck, and the back door banking (BOA, Wells Fargo, Trustco.), I am sure the President will not allow all of us to suffer for those fu money lawndering ucks that give free presents, homes, roofs, air conditioners, cars, trucks, etc.  Especially since all of us are not receiving all of those "free gifts" and why should we all suffer for those fu chicks anyway?
Nov 30, 2012 8:58PM
I say give him everything he wants when it all fails then it will truely be on him.
Nov 30, 2012 8:54PM
Frankly, I'd like to hear from the states whose elected Official in Congress signed the Norquist Pledge and won't increase taxes on the rich. If the majority thinks differently from their deadbeat Republican stonewaller, the impediment needs to go so adults can fashion repairs, remedies, reforms and public restitution for the adverse political pollution and confusion.
Nov 30, 2012 8:39PM
Time for Obama to show us his"bipartisen" spirt, and represent all americans in this!!.Come on put on your big boy pants.
Nov 30, 2012 8:25PM
The Democrats are not negotiating in good faith. The problem is too much spending.

Raising taxes on the rich will kill job growth and the economy, and merely cause them to leave the country to avoid paying taxes. People should really pay attention to how many rich are leaving the country in the UK because of the punitive tax rates.

There needs to be an emphasis on balancing the budget and not killing the economy and jobs with higher taxes.

Nov 30, 2012 8:17PM
Time for the Republicans to get serious about raising taxes, cutting military spending, and protecting the poor, working class, unemployed, and Seniors! 
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