A big disconnect as 'fiscal cliff' clock ticks
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| FILE - In this Nov. 21, 2012, file photo, President Barack Obama speaks about the Thanksgiving holiday in the Rose Garden of the White House in Washington. The White House said Tuesday, Nov. 27, that the president plans to make a public case this week for his strategy for dealing with the looming fiscal cliff, traveling to the Philadelphia suburbs Friday as he pressures Republicans to allow tax increases on the wealthy while extending tax cuts for families earning $250,000 or less. |
WASHINGTON
(AP) -- Republicans' newfound willingness to consider tax increases to
avert the "fiscal cliff" comes with a significant caveat: larger cuts
than Democrats seem willing to consider to benefit programs like
Medicare, Medicaid and the president's health care overhaul.
The
disconnect on benefit programs, coupled with an impasse between
Republicans and the White House over raising tax rates on upper-bracket
earners, paints a bleak picture as the clock ticks toward a year-end
fiscal debacle of automatic spending increases and harsh cuts to the
Pentagon and domestic programs.
Democrats
emboldened by the election are moving in the opposite direction from the
GOP on curbing spending, refusing to look at cuts that were on the
bargaining table just last year. Those include any changes to Social
Security, even though President Barack Obama was willing back then to
consider cuts in future benefits through lower cost-of-living increases.
Obama also considered raising the eligibility age for Medicare, an idea
that most Democrats oppose.
"I haven't seen
any suggestions on what they're going to do on spending," a frustrated
Sen. Orrin Hatch, R-Utah, said Tuesday. "There's a certain cockiness
that I've seen that is really astounding to me since we're basically in
the same position we were before."
Well, says
Obama's most powerful ally on Capitol Hill, the Democrats are willing to
tackle spending on entitlement programs if Republicans agree to raise
income tax rates on the wealthiest Americans - a nonstarter with
Republicans still in control of the House.
"We
hope that they can agree to the tax revenue that we're talking about,
and that is rate increases, and as the president's said on a number of
occasions, we'll be happy to deal with entitlements," Senate Majority
Leader Harry Reid, D-Nev., said Tuesday.
But
Reid speaks only in the most general terms, wary of publicly embracing
specific ideas like boosting Medicare premiums or raising the program's
eligibility age.
At the White House, Obama met
with more than a dozen small business owners. Participants described
the hour-long meeting as a listening session for Obama, with the
business owners urging him to reach an agreement.
"They
had one message for the president, which is they need certainty. Please
get this deal done as soon as possible. They very much want consumers
out there knowing that they're going to have money in their pockets to
spend. That's why it's so important to pass the extension of the tax
cuts for 98 percent of consumers, 97 percent of all small businesses,"
said Small Business Administration head Karen Mills.
Obama
hits the road on Friday, visiting a Pennsylvania toy factory and
broadcasting his case to extend current tax rates for all but those
families making more than $250,000 a year.
Private
White House negotiations with top aides to House Speaker John Boehner,
R-Ohio, and others are cloaked in secrecy, with no evidence of headway.
"There's
been little progress with the Republicans, which is a disappointment to
me," Reid, a key negotiator, told reporters on Tuesday. "They talked
some happy talk about doing revenues, but we only have a couple weeks to
get something done. So we have to get away from the happy talk and
start talking about specific things."
Republicans
say it's Obama and his Democratic allies on Capitol Hill who are
holding back, and they point to a balance of power in official
Washington that is little changed by the president's re-election.
Republicans still control the House, despite losing seats in the
election. Democrats control the Senate.
"Democrats
in Congress have downplayed the danger of going over the cliff and
continue to rule out sensible spending cuts that must be part of any
significant agreement to reduce the deficit," said Michael Steel,
spokesman for House Speaker John Boehner, R-Ohio.
Just
last year, Obama and top Democrats were willing during budget
negotiations with Republicans to take politically risky steps such as
reducing the annual inflation adjustment to Social Security retirement
payments and raising the eligibility age for Medicare, which provides
health care coverage to the elderly.
Now, with
new leverage from Obama's election victory and a playing field for
negotiations that is more favorable to Democrats than during the talks
of the summer of 2011, Democrats are taking a harder line, ruling out
any moves on Social Security and all but dismissing ideas like raising
the eligibility age for Medicare from 65.
"The
election spoke very strongly about the fact that the American people
don't want to cut these programs that actually really sustain the middle
class in America and allow people to become part of the middle class,"
said Sen. Tom Harkin, D-Iowa.
"I think they
feel somewhat emboldened by the election," said GOP Rep. Tom Price of
Georgia. "How could you not when your president is re-elected after
running straight years of trillion dollar-plus deficits?"
Indeed,
Obama could be in position to blame Republicans if an impasse results
in the government going over the fiscal cliff. Democrats already are
portraying GOP lawmakers as hostage-takers willing to let tax rates rise
on everyone if lower Bush-era tax rates are not extended for the top 2
percent to 3 percent of earners - those with incomes above $200,000 for
individuals and $250,000 for joint filers.
"One
thing Republicans have to realize - we're in much better shape in
January," said Harkin, referring to a
time when taxes would have already
risen and Democrats would be offering to cut taxes for all but the
wealthiest Americans. "Fiscal cliff? I don't care."
Obama's
opening position in the negotiations calls for $1.6 trillion in higher
taxes over the coming decade, balanced by just $340 billion in cuts to
rapidly growing health care programs, generally taken from health care
providers instead of beneficiaries. That balance would have to change
for Republicans to sign onto any agreement.
Given
the crunch of time and the complexity of issues such as tax reform and
wringing savings from programs like Medicare, negotiators are working on
a two-track process: an initial "down payment" of deficit cuts next
month, coupled with work next year on overhauling the tax code and
curbing entitlement programs.
Sen. Dick
Durbin, D-Ill., a leading Senate liberal and a member of Obama's special
2010 deficit panel - which drafted a bold deficit reduction plan
blending painful entitlement cuts with $2 trillion in higher tax
revenues - weighed in with a demand that any short-term down payment
avoid politically sensitive safety net programs.
"Progressives
should be willing to talk about ways to ensure the long-term viability
of Social Security, Medicare and Medicaid, but those conversations
should not be part of a plan to avert the fiscal cliff," Durbin said in a
speech at the liberal Center for American Progress think tank in
Washington.
