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.

More from The Fiscal Times:

228Comments
Dec 3, 2012 8:56AM
avatar
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.
Dec 3, 2012 8:55AM
avatar

"Multiple studies have found that after the tax holiday provision passed in 2004, there was no significant investment in jobs at home. For every dollar repatriated, 92 cents flowed into the pockets of CEOs and shareholders through compensation packages and stock repurchases. Instead of investing in jobs in the United States, these 20 companies have directed nearly $578 million into compensation packages for their CEOs and $500 billion into offshore tax havens."
Source: publicampaign (dot) org

 

So abandon the Dollar and establish a new currency. You are either on board with it or on board a jet for your new home. Require in-person exchange. The idea of stressing people to the limit over money is outrageous. What False Elitists did is terrorism.

Dec 3, 2012 8:51AM
avatar

The coalition is kicking off a splashy $80 million lobbying campaign to “Fix the Debt,” a plan that, according to the Institute for Policy Studies, consists of two basic points: “pro-growth” corporate tax reform and “reforming” earned-benefit programs. In plain English, their goal is to make cuts to Medicare and Social Security while securing windfalls for some of the country’s biggest corporations—a plan that’s nowhere near balanced."
Source: publicampaign (dot) org.

 

The better approach is to dissolve Incorporation and eliminate the veil of anonymity. Repeal the Tax Reform Act and restore the prior tax rates, deductions and shelters. Allow a 48 hour window for those who can't live with the rest of us to relocate, then abandon the Dollar and establish a new currency requiring in-person exchange. I haven't seen the rich create jobs. If you are rich and the nation is imperiled by your wealth, the solution becomes clearly obvious.

Dec 3, 2012 8:41AM
avatar
18 days left before the end of the world and nearly every portal for the common man's opinion has been eliminated. No more Charley Blaine, Bill Fleckenstein and the Comments blogs that allow us to exercise our First Amendmant Rights. In less than 18 days, if Congress has not arrived at a solution that benefits ALL of us, then it is our right to tear down that institution and replace it. The Constitution begins... We the People, not We the Selected People who use Twitter and Facebook. The fabric of the nation is tearing, to be naked and left to the elements and variables isn't a game you can reset, kids. No society ever in history survived by pushing paper, pressing buttons and funding dysfunction over functionality. Every society run into the ground by the rich ends horribly.
Dec 3, 2012 7:52AM
avatar

Obama will run us off the cliff, it's does exactly want he wants. He wants to get rid of the Bush tax cuts, and the cuts comes mostly from defense spending, When the country starts the second recession he will blame the Republicans for it. Just look at his proposal, he knows there is no way the congress will ever give up their control of the debt ceiling nor should they and more stimulus spending are you kidding.

Dec 3, 2012 3:34AM
avatar
Our goverment has gotten way to big.The rich politicians really could care less about us so called little people. I hate to think whats going to have to happen in our country to pull these so called elected leaders down to earth. Sure take the guns away from the people as other countrys have done. That way we control them better. This fighting in washington must stop and they have got to get our country back on track. They think our tax money is their money to spend as they please. People we need to stop this crap. Now not later. If they cant do their job as they are supposed to kick them out of there. This country is for the people who live here.AMEN
Dec 3, 2012 2:27AM
avatar
Republicans and Democrats alike are not accountable to anyone in any real sense. Even if they do nothing for the next six months, it would still be 18 more months before an election would allow us to voice our opinion. 18 months is a life time in politics. So what if we go over the fiscal cliff? Who among us is going to stand up and say "Throw the bums out and get some real men in here."?Who si going to not go to work and instead go out inot the streets and say we have had enough? 
Dec 3, 2012 1:40AM
avatar
"A coalition of 95 companies, including some of the country’s largest corporations, are urging Congress to “Fix the Debt,” through a plan that mostly hurts middle class families while preserving tax breaks and windfalls for big corporations.

The coalition is kicking off a splashy $80 million lobbying campaign to “Fix the Debt,” a plan that, according to the Institute for Policy Studies,  consists of two basic points: “pro-growth” corporate tax reform and “reforming” earned-benefit programs. In plain English, their goal is to make cuts to Medicare and Social Security while securing windfalls for some of the country’s biggest corporations—a plan that’s nowhere near balanced."

Source: publicampaign (dot) org
Dec 3, 2012 1:23AM
avatar
Republicans would rather go over the fiscal cliff than extend tax breaks for the middle class with no strings attached.
Dec 3, 2012 12:48AM
avatar
"Twenty major American corporations that have stashed half a trillion dollars of profits overseas have spent more than $1 billion on federal lobbying and campaign contributions and hope to get a new, enormous tax break that could cost the government $79 billion over the next decade.Companies say they will use the cash to create jobs in America, but the 20 companies featured in this report are already sitting on $348 billion in cash while in many cases shipping jobs overseas."

"Multiple studies have found that after the tax holiday provision passed in 2004, there was no significant investment in jobs at home. For every dollar repatriated, 92 cents flowed into the pockets of CEOs and shareholders through compensation packages and stock repurchases. Instead of investing in jobs in the United States, these 20 companies have directed nearly $578 million into compensation packages for their CEOs and $500 billion into offshore tax havens."


Source: publicampaign (dot) org
Dec 3, 2012 12:12AM
avatar

Entitlement, SS we work all are life for it, If it wasn't for old people we would not even have a country.

You want to cut something, Lets start with food stamps. Free phones.Free housing.

And at least 10 other programs you can cut,Stop all this free **** for people that won't work.

As soon as they want to cut something it always SS,I payed in for 50 years keep your dirty hands off of it. Its not yours or anyone in the white house; Most old people SS is all they got. We don't get all the free ****. We should,We made this country not you, Most of you running this country don't work anyway.

Us old people was working when you were bouncing in your old mans balls.

Cut the dead beats, And your pay

Dec 2, 2012 11:55PM
avatar
Lets put the blame where it truly belongs. On all of us. We have elect this idiots to make decisions about OUR country. We need to kick them ALL out and take control of OUR country again. Make term limits for the Senate and Congress. Let them pay for their Health and Retirement benefits like many of us do. Lets start taking control of OUR Country again and making America Strong. We need to stop taking care of other countries and start taking caring of OUR OWN. 
Dec 2, 2012 11:45PM
avatar
I also don't think we need to extend the unemployment benefits. Sorry but time to take any job and find the perfect one later.  I agree with cutting congress benefits - it doesn't make much of a dent but congress needs to bite the bullet along with the rest of us.
Dec 2, 2012 11:38PM
avatar
We had a budget in the black before the Bush tax cuts. First step - get rid of those cuts then move forward with the rest.  

I'd also hope for a Social security fix like was done in the 70's - but done in such a way that congress not have access to those funds. Re: Medicare - look at your next paycheck - you're only paying 1.3%. Just. Bump up that a tenth of a point of two and it's fixed for the moment.
Dec 2, 2012 10:53PM
avatar
How about putting foreign aid on the table, why is it that the American people always take the hit???
Dec 2, 2012 10:45PM
avatar
It is not a game of chicken, It is a fact that the dems will not do anything,NOTHING to help
Dec 2, 2012 6:53PM
avatar
When the Piper stumbles a loop hole will save him from breaking his neck .He will get up, and keep walking, and blowing the horn . Some followers will eat steak ,and some will eat grasshoppers .They will always eat until the heart, and brain rot . We will all rot ,and we will all blame someone else , but while your here ,what is on the menu is your own cooking  , Keep looking for your own loop hole before your end           worry can only worry     smile if its on your mind    what are the options
Dec 2, 2012 1:48PM
avatar
Did anybody believe that there would actually be a compromise? Hate to tell you all this, but there will not likely be a compromise. Should there be a compromise it will be hastily be cobbled together and do more harm than good.
Dec 2, 2012 1:36PM
avatar
Why... never try to explain anything to Republicans, they can't process beyond their own delusions. The truth is-- we will crash and it will be bad. try not to look at who survives and how, try harder to be a survivor right now. 
Dec 2, 2012 12:52PM
avatar
Someone should explain to the Republicans why the nation is in this situation.  Don't they recall 
Ex-President Bush was in office.  Greed......Greed......Greed will control your life.  Sad they need to live this way. 
Report
Please help us to maintain a healthy and vibrant community by reporting any illegal or inappropriate behavior. If you believe a message violates theCode of Conductplease use this form to notify the moderators. They will investigate your report and take appropriate action. If necessary, they report all illegal activity to the proper authorities.
Categories
100 character limit
Are you sure you want to delete this comment?

DATA PROVIDERS

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.

VIDEO ON MSN MONEY

RECENT QUOTES

WATCHLIST

Symbol
Last
Change
Shares
Quotes delayed at least 15 min
Sponsored by:

MARKET UPDATE

NAMELASTCHANGE% CHANGE
There’s a problem getting this information right now. Please try again later.
NAMELASTCHANGE% CHANGE
There’s a problem getting this information right now. Please try again later.
Market index data delayed by 15 minutes

[BRIEFING.COM] The stock market ended the holiday-shortened week on a mixed note as the Dow Jones Industrial Average shed 0.1%, while the S&P 500 added 0.1% with seven sectors posting gains.

Equity indices faced an uphill climb from the opening bell after disappointing quarterly results from Google (GOOG 536.10, -20.44) and IBM (IBM 190.04, -6.36) weighed on the early sentiment. Google reported earnings $0.15 below the Capital IQ consensus estimate on revenue of $15.42 ... More


Currencies

NAMELASTCHANGE% CHANGE
There’s a problem getting this information right now. Please try again later.