The Herald Bulletin

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December 11, 2012

No one retreating; cliff talks seem at standstill

WASHINGTON —  A year-end deadline approaching, quiet negotiations to avoid an economy-rattling "fiscal cliff" yielded no tangible signs of progress on Monday as Republicans pressed President Barack Obama to volunteer spending cuts he will support while the White House insisted the GOP endorse higher tax rates on upper incomes.

At a campaign-style event in Michigan, Obama warned his listeners their taxes will rise on Jan. 1 without action by the Congress. "That's a hit you can't afford to take," he declared.

He spoke one day after meeting privately at the White House with House Speaker John Boehner, whose office expressed frustration with the talks to date.

"We continue to wait for the president to identify the spending cuts he's willing to make as part of the 'balanced' approach he promised the American people,'" said a written statement from the Ohio Republican's office.

The negotiations are designed to prevent across-the-board tax increases and spending cuts scheduled to begin at the turn of the year, a combination that economists say poses the threat of a new recession.

While leaders in both parties say they are eager to avoid that "cliff," efforts to agree on a plan to cut deficits by other measures have turned into a major postelection showdown between opposing sides in a divided government.

After meeting with Boehner on Sunday, Obama dispatched a top aide to the Capitol to continue talks with the speaker's staff, but officials in both parties said they knew of no progress as a result.

Obama spoke with Senate Majority Leader Harry Reid, D-Nev., by phone on Monday, as he has consulted with House Democratic leader Nancy Pelosi of California in recent days. The White House did not dispute that the president was prepared to modestly scale back his initial demand for $1.6 trillion in new tax revenue over a decade, twice as much as Boehner has offered.

Many Republicans agree that Obama and the Democrats hold most of the political leverage, given the president's re-election more than a month ago after a campaign in which he said the wealthy should pay more in taxes.

If anything, the president has toughened his demands in recent days, insisting not only that tax rates must rise, but also that Congress give him and future presidents the authority to raise the government's borrowing limit without prior approval by lawmakers.

Boehner, while claiming his own election mandate for the Republican majority in the House, said within a few days of the voting he was prepared to buck many in his party and support additional tax revenue as part of a fiscal cliff agreement.

The Ohio Republican has said repeatedly he opposes Obama's plan to raise tax rates for anyone, adding that he prefers to raise revenue by closing loopholes. Yet he has not yet ruled out giving the president his way, and some Republicans have said they are prepared to do so — encouraging Democrats to say they anticipate the speaker will eventually yield on the point.

White House Press Secretary Jay Carney told reporters as Obama went to Michigan that "the president believes that a deal is possible. It requires acceptance and acknowledgement in a concrete way by Republicans that the top 2 percent will see an increase in their rates."

In his remarks at the Daimler Detroit Diesel Plant, Obama said the Democrats would "make some tough spending cuts on things that we don't need" as part of his budget plans, although he didn't mention any of them by name.

Republicans have increasingly expressed frustration in recent days as they accuse Obama and the Democrats of failing to talk in specifics when it comes to spending cuts that many of their constituencies are likely to balk at.

In talks that ended in failure 18 months ago, according to aides in both political parties, Obama had tentatively agreed to a proposal to raise the age of Medicare eligibility from 65 to 67 beginning in a decade, and had also said he would accept a change to slow the annual cost-of-living increases that go to recipients of Social Security and other federal benefits.

This time, the two sides have advanced opening proposals that are short of specifics and reflect different priorities.

Obama's plan would raise $1.6 trillion in revenue over 10 years, in part by raising tax rates on incomes over $200,000 for individuals and $250,000 for couples.

He has recommended $400 billion in spending cuts over a decade.

He also is seeking extension of the Social Security payroll tax cut due to expire on Jan. 1, a continuation in long-term unemployment benefits and steps to help hard-pressed homeowners and doctors who treat Medicare patients.

Boehner's plan, in addition to calling for $800 billion in new revenue, envisions $600 billion in savings over a decade from Medicare, Medicaid and other government health programs as well as $300 billion from other benefit programs and another $300 billion from other domestic programs.

It would trim annual increases in Social Security payments to beneficiaries, and it calls for gradually raising the eligibility age for Medicare from 65 to 67, beginning in a decade.

 

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