U.S. Fiscal Cliff Watch: Public Posturing, Private Talks Continue

Published Dec 7, 2012. By John Shaw. In MNI.


WASHINGTON (MNI) - House Speaker John Boehner did not engage in happy talk Friday as he described where he thinks negotiations stand to avert the fiscal cliff. But he acknowledged talks among staff are continuing behind the scenes, and budget experts are more hopeful the White House and House Republicans are inching closer to a deal.

It would be hard to draw that conclusion from Boehner's briefing however. In simple and terse words he blamed President Barack Obama for "another wasted week" in the fiscal cliff standoff. He argued that Republicans offered a good faith alternative and have not yet received a counteroffer from the White House -- the identical attack the White House used last week.

"If the president doesn't agree with our proposal I believe that he's got an obligation to families and small businesses to offer a plan of his own, a plan that could pass both chambers of the Congress," he said. "We're ready and eager to talk to the president about such a plan."

The Speaker confirmed that he and Obama spoke Wednesday and that their staffs met Thursday.

"The phone calls was pleasant, but it was just more of the same, like the conversations that the staff had yesterday, just more of the same," he said.

For his part, Obama has expressed public words of hopefulness about an agreement, but has not hinted at what concessions he is willing to make.

"Nobody wants to get this done more than me," Obama told executives from the Business Roundtable Wednesday, but he said increasing the marginal tax rates on the wealthiest taxpayers is an essential part of any agreement.

"We're not insisting on rates out of spite or partisan bickering," he said, but the revenue higher rates generate are essential to a balanced agreement.

Obama said once the GOP accepts this demand for higher marginal rates on the wealthiest, "We can probably solve this in about a week. It's not that tough."

However, Treasury Secretary Tim Geithner's statement that the administration is willing to take the economy over the fiscal cliff - the Jan. 1 expiration of the Bush-era tax cuts and implementation of mandatory, across-the-board spending cuts - has shaken up Washington.

Boehner slammed the comments as "reckless talk," but it was clearly the message that the White House feels its negotiating position is a strong one.

The president will travel to Michigan Monday to talk about fiscal issues, another out-of-Washington foray which angers Republicans who say the president should be negotiating with them in the capital, not traveling the nation.

Bob Bixby, the executive director of the Concord Coalition, a budget watchdog group, said the current political landscape is a complex mix of public posturing and private probing for an agreement.

"It still think there is a very good chance we get some kind of agreement by the end of the year. What I worry about is that it's a smaller, fiscal cliff deal and not the kind of Grand Bargain we need," Bixby said.

"My chief concern is that we come up with a mini-deal that seems bigger than it really is. It could get puffed up with war savings, and interest savings, and by citing savings from last year's debt ceiling deal - but still fail to make important changes to entitlement programs," he said.

A senior Republican staffer told MNI Thursday evening that the talks are now between Obama and Boehner, with other congressional leaders effectively pushed off to the periphery.

"It's now a two-person negotiation. I guess that's bad for those who are excluded -(Senate Minority Leader Mitch) McConnell, (Senate Majority Leader Harry) Reid and (House Minority Leader Nancy) Pelosi - but it makes it a simpler, cleaner negotiation. It probably makes it easier to do a deal," the staffer said.

He added that some of the basic contours of an agreement are clear such as increasing marginal tax rate but not to the 39.6% level for the top earners that Obama wants, but moving it to 37% or 38%. This could be coupled with increasing the Medicare eligibility age gradually or embracing the chained CPI for indexing Social Security and other benefit programs.

"If Obama and Boehner want an agreement, it's out there to be had," the staffer said.

Last week, Obama offered a proposal that calls for $1.6 trillion in additional revenues, $600 billion in entitlement savings and $50 billion for new infrastructure spending.

The administration plan also calls for the extension of Bush era tax cuts for salaries up to $250,000 a year, the extension of the two percentage point payroll tax reduction first approved in 2010, renewal of unemployment insurance benefits, and a housing refinance provision to help homeowners who are underwater in their mortgages.

The administration is recommending a revised procedure for the debt ceiling in which Congress no longer would have to affirmatively approve a debt hike. Instead, Congress would be able to block debt ceiling increases by passing motions of disapproval, but these would take two-thirds majorities in both chambers. Last week, the House Republicans countered with a plan that calls for $1.4 trillion in spending cuts and $800 billion in additional revenues through tax reform.

The spending savings include $600 billion from health care entitlements, $300 billion from other entitlements, $200 billion by using the chained CPI for indexing benefit programs and $300 billion in additional discretionary savings.

Boehner has said he remains convinced that it is possible to raise $800 billion in revenue by closing loopholes and limiting deductions, adding that the bulk of these revenues would come from upper income people.