Listen closely and you can hear the sounds of a “fiscal cliff” deal NOT coming together. The first week of the lame-duck Congress brought multiple pledges of bipartisan cooperation from President Obama and congressional Republican and Democratic leaders. But there has been very little – if any – movement in the two sides’ positions, which, in fact, may be hardening prior to the serious negotiating sessions expected to begin after Thanksgiving.
The White House continues to insist that tax rates must go up on households earning more than $250,000 per year, indicating that the president will reject House Speaker John Boehner’s (R-Ohio) offer to increase tax revenue without touching the current, Bush-era rates. And Republicans continue to reject rate increases and have begun to focus on the spending cuts – particularly to “entitlement” programs such as Medicare – that Democrats will have to swallow to get a deal.
The Jan. 1 “fiscal cliff” that is preoccupying policy circles will hit in multiple ways, but most profoundly by the expiration of the Bush-era tax rates for all taxpayers and spending cuts that will eliminate $100 billion in government spending in the coming year (and $1.2 trillion over 10 years). Many economists say the country will plunge back into recession if Congress and the president fail to reach a tax and spending-cut deal and drive over the cliff.
Where do things stand? According to National Journal, Senate Democrats are convinced that Republicans will agree to accept a Senate-passed bill that raises taxes on the top earners but preserves current tax rates for most Americans. Republicans say Democrats are dreaming. (Read the National Journal story here: http://bit.ly/UQbgPu)
Democrats are also pointing to various moves by Boehner to strengthen his hand within his own House Republican Conference, ostensibly to rein in tea-party conservatives and give the speaker room to negotiate with Obama. (Read The Hill’s report on Boehner here: http://bit.ly/USxfoI) But Boehner’s improved standing doesn’t necessarily translate into a willingness to give in on taxes. In fact, the opposite may be true: Boehner has nothing to lose within Republican circles by rejecting tax rate increases, but he has plenty to lose by going along with the president.
A Boehner aide tells National Journal that a deal in the coming weeks would involve agreement on “long-term revenue targets,” in other words, tax increases, and “savings from entitlement programs,” which means Medicare and other cuts.
“Revenue targets” can be reached in many ways. For instance, capping the deductions claimed by the wealthiest taxpayers could yield over $1 trillion in revenue, and appears to be in play. But the president and most congressional Democrats believe this debate is also about tax code fairness, and have drawn a bright line around increasing the rates for the top earners that will be very hard to erase in the negotiations.
And it will probably be impossible to bring Democrats – or Obama himself – along for major cuts in spending on health care and other programs cherished by Democrats unless they can claim a victory by raising the upper tax rate.
So, the deal isn’t done, by a long stretch. It may not be possible, in fact, to reconcile the two positions, and that means an automatic tax hike for everyone and deep spending cuts throughout the government. Some Obama allies say that might set the stage for a deal on tax reform that both sides would have to buy into, but the White House has said repeatedly that it doesn’t want to see things develop that way.
Amid this uncertainty, you can weigh in with your lawmakers during the fiscal cliff negotiations by going to PopVox.com.
About the Author (Author Profile)
CHARLIE MITCHELL. Editor and CEO. Mitchell has covered Washington for two decades. Days after Republicans recaptured the House in 1994, he helped launch a publication called Inside the New Congress. Mitchell went on to become the managing editor of National Journal’s Congress Daily and later editor-in-chief of Roll Call, two of the most respected congressional news outlets in Washington.