‘Cliff’ deal by Christmas said growing dim on Hill
Thursday, December 13, 2012
WASHINGTON Republicans in Congress hardened their resistance to President Barack Obama’s proposed higher taxes for top earners and demanded a spending-cut plan, as lawmakers in both parties said it’s becoming less likely an agreement can be enacted before Christmas.
Obama’s budget plan is “mainly tax hikes,” House Speaker John Boehner told reporters Wednesday in Washington. “We’ve got some serious differences.” During a phone call Tuesday, Boehner said, he and the president were “frank” about “how far apart we are.”
If Congress doesn’t act, more than $600 billion in tax increases and spending cuts, the “fiscal cliff,” will start taking effect in January. Tax rates for income at all levels will rise, along with taxes on estates, capital gains and dividends.
The gloomy outlook shared by Republicans and Democrats about passing a deal by Dec. 25 comes amid a campaign by outside groups, in particular chief executives of major companies, urging Obama and Boehner to find a compromise.
JPMorgan Chase Chief Executive Officer Jamie Dimon said Wednesday that the U.S. economy would thrive next year if lawmakers come up with a deal.
“You might have a booming economy in a couple of months,” with economic growth accelerating to 4 percent rather than 2 percent, Dimon said Wednesday at a conference in New York hosted by The New York Times’ DealBook.
Republicans say Obama’s unwillingness to specify entitlement spending cuts is hampering a deal, while Democrats say talks are stalled over Boehner’s refusal to allow income tax rates to expire for the top 2 percent of earners.
“The reports I have from people at the White House are that Boehner and his staff really are unhelpful this week,” Sen. Dick Durbin of Illinois, the second-ranking Democrat, said Wednesday. “There just has been very little progress made.”
Senate Majority Leader Harry Reid, D-Nev., said on the Senate floor Wednesday that he was “very, very disappointed” with the lack of progress. He said Republicans will either agree to raise tax rates for top earners, “or we are going to go over the cliff” of tax increases and spending cuts.
House leaders are telling members that votes are possible after Christmas, said Rep. Doc Hastings, R-Wash. “It’s going to be a long December,” he said.
Senate Minority Leader Mitch McConnell, R-Ky., said Obama’s focus on higher tax rates for top earners has made a deal tough to reach.
“The president and his allies have taken so many things off the table the only thing left is varnish,” McConnell said.
“There’s not much progress,” said Rep. Charles Boustany, R-La., after leaving a party meeting. “We’re going to hold the line” on tax rates.
White House press secretary Jay Carney said Wednesday that the president will hold firm on his insistence that the rates for top earners must rise. He wouldn’t give a timeline for the talks or for reaching a deal.
“The parameters of what a deal would look like are clear,” Carney said. While Obama is “willing to make tough choices on the spending side,” Republicans must accept letting rates rise for top earners. He called Republican offers to raise revenue by curbing tax breaks vague.
Separately, Democrats are stepping up their campaign to extend tax cuts for all except the top earners. House Minority Leader Nancy Pelosi of California called on House Republicans to advance a Senate-passed bill to maintain tax cuts for married couples earning less than $250,000 a year.
“The Republicans have isolated themselves,” Pelosi told reporters Wednesday at the Capitol. She compared the situation to the debate over the payroll-tax cut extension in 2011, when days before its scheduled expiration, Republicans dropped their opposition. “Republicans are just delaying, delaying and delaying, and that’s not responsible.”
Obama held a meeting and conference call with a bipartisan group of mayors and community leaders to seek support for his talks with congressional Republicans on the budget.
“I didn’t detect frustration,” Mayor Michael Coleman of Columbus, Ohio, said of the president. “But I can tell you we’re frustrated, and I think America’s becoming frustrated.”
“An increase in the taxes on the wealthiest Americans does not hurt the economy, does not set us back and in fact propels us forward,” said Mayor Chris Coleman of St. Paul, Minn.
Obama on Tuesday reduced his demand for new tax revenue to $1.4 trillion from $1.6 trillion. Republicans still have an $800 billion revenue target, party aides said.
Boehner said Obama’s demand for $1.4 trillion in more tax revenue “can’t pass the House and Senate.” Durbin said the offer demonstrates that “the president’s trying to show some flexibility and move the negotiations forward.”
Maryland’s Rep. Chris Van Hollen, the top Democrat on the House Budget Committee, said he’s concerned that Boehner may think he’s unable to make a deal perceived as “reasonable to the vast majority of the country” because it may put his speakership at risk when the next Congress convenes in January.
In another twist, some of the House’s most uncompromising conservatives joined ranks with its most ardent liberals in embracing a ride into the fiscal unknown next month. Rep. Steve King, R-Iowa, said the across-the-board spending cuts to military and domestic programs would “break the mold and get some real cuts for a change.”
Rep. Cynthia Lummis, RWyo., compared fears of a fiscal crisis to hysteria over the end of the Mayan calendar later this month.
“A bad deal is worse than no deal at all,” she said. “What is being made of this fiscal cliff is too much.”
Republican leadership aides dismissed such talk as the incessant grumbling of a group that has made dissent a sport. Michael Steel, a spokesman for Boehner, called Van Hollen’s assertion “nutty.”
Rep. Kevin Brady, R-Texas, said, “The speaker’s got us very unified.”
It’s becoming increasingly doubtful a plan can be enacted by Christmas, Van Hollen said at a breakfast in Washington sponsored by The Christian Science Monitor. The two sides would have to strike a deal on a framework by the end of this week to pass legislation in both chambers by Dec. 25, he said.
“We are going to stay here right up until Christmas Eve, throughout the time period before the New Year,” said House Majority Leader Eric Cantor, R-Va.
The president’s plan also would include a corporate-tax overhaul, according to an official familiar with the negotiations who wasn’t authorized to describe them publicly and asked to not be identified.
The two sides remain hundreds of billions of dollars apart on taxes and spending, and they continue to disagree on whether a year-end deal should include an increase in the debt limit and fresh programs to boost the economy.
Many conservatives say they would oppose a deficitcutting package negotiated by Boehner that included higher tax rates.
“I’ll say no, because the focus has got to be on economic growth,” said Rep. Jim Jordan, R-Ohio. “The simple fact is raising taxes is not going to grow our economy.”
Others wouldn’t rule it out completely.
“If there’s real cuts in spending, if there’s real reform of entitlement programs, I think all of us would have to reconsider our position,” Rep. Raul Labrador, R-Idaho, said Wednesday. “But the problem is, I don’t see real cuts, real cuts. I’m not saying yes and I’m not saying no.”
Liberal Democrats are trying to pull Obama in the opposite direction on Medicare and Social Security. Eighteen months ago, Obama had all but agreed to an increase in the retirement age and a less generous inflation adjustment for calculating Social Security cost-of-living adjustments.
Pelosi warned Republicans against insisting on raising the Medicare eligibility age as part of any deal.
“Don’t go there,” Pelosi said on CBS This Morning. She said raising the retirement age wouldn’t contribute much savings toward an agreement in the short term, adding, “Is it just a trophy that the Republicans want to take home?”
Raising the Medicare age from 65 to 67 could cut Medicare costs by $162 billion over a decade, according to a Congressional Budget Office estimate last year. But by 2035, it would cut Medicare’s projected budget by 7 percent.
That estimate, however, assumes the eligibility age would increase rather abruptly and hit people just about to retire. Republicans have said that their Medicare proposals won’t affect now those 55 and above.
Democrats also are pushing back against a GOP plan to reduce Social Security cost-of-living adjustments, another step back from where Obama and Boehner were just 18 months ago.
“Quite frankly, Social Security is off the table,” said Rep. Joe Crowley, D-N.Y.
Meanwhile, Ralph Reed, who helped build the Christian Coalition, said House Republicans should fight to retain charitable tax deductions and child tax credits as they negotiate with Obama.
“You’d better start figuring out a way to be for middleclass families with children instead of looking like all you care about is a guy’s capitalgains tax,” Reed said in an interview Wednesday with Bloomberg Government.
Reed served as the Christian Coalition’s executive director and helped it become influential within Republican circles. He left the group in 1997 and three years ago started the Faith and Freedom Coalition, a nonprofit organization that identifies and reaches out to evangelical Christian voters.
Reed also served as a political consultant for George W. Bush’s two presidential campaigns and unsuccessfully ran for lieutenant governor of Georgia. His work on behalf of Indian tribes with casino interests linked him to the scandal that led to the imprisonment of lobbyist Jack Abramoff. Reed, who received more than $4 million from Abramoff clients, faced no charges in the case.
Information for this article was contributed by Kathleen Hunter, Heidi Przybyla, Richard Rubin, James Rowley, Hans Nichols, Roxana Tiron, Roger Runningen, Dawn Kopecki and Julie Bykowicz of Bloomberg News; by Jonathan Weisman and Jackie Calmes of The New York Times; and by Andrew Taylor, Alan Fram and Nyia Hawkins of The Associated Press.
Front Section, Pages 1 on 12/13/2012