Outlook remains cloudy for "fiscal cliff" deal

WASHINGTON Wed Dec 12, 2012 10:40am EST

U.S. President Barack Obama hosts a bipartisan meeting with Congressional leaders in the Roosevelt Room of White House to discuss the economy, November 16, 2012. REUTERS/Larry Downing

U.S. President Barack Obama hosts a bipartisan meeting with Congressional leaders in the Roosevelt Room of White House to discuss the economy, November 16, 2012.

Credit: Reuters/Larry Downing

Related Topics

WASHINGTON (Reuters) - More public jousting in the "fiscal cliff" talks is expected from Democrats and Republicans on Wednesday in what has become a daily ritual of demanding more specific proposals to avert the steep tax hikes and budget cuts set for the end of the year.

On Tuesday the White House and House of Representatives Speaker John Boehner traded offers still couched in broad and familiar terms that neither side found sufficiently detailed.

Boehner was expected to hold a news conference at 10 a.m. on Wednesday.

At noon, Obama planned to discuss the economy, deficit, taxes and the fiscal cliff with bipartisan group of mayors and community leaders, although that event was private.

If the public back and forth between Boehner and President Barack Obama reflects what's happening behind the scenes, negotiations to avoid the cliff have a long way to go in the short time remaining in 2012.

Obama and Boehner each have proposed cutting deficits by more than $4 trillion in the next 10 years as a way of averting the cliff, but they differ on how to get there. Economists have warned that failure to strike a deal could send the economy back into a recession.

On Tuesday Boehner rejected what the White House viewed as a concession, shrinking the proportion of deficit reduction to come from revenue from $1.6 trillion over 10 years to $1.4 trillion. Boehner has called for $800 billion in revenue through tax reform.

The White House has also repeated a proposal it made in February to consider reductions in corporate tax rates, a source familiar with the talks told Reuters.

That proposition is considered relatively uncontroversial compared to such politically sensitive matters as cutting entitlement programs such as Medicare, the government health insurance program for the elderly.

On Wednesday, House Democratic Leader Nancy Pelosi said Democrats in the House objected to raising the age when seniors become eligible for Medicare, which now stands at 65, as a way to cut government spending.

"Raising the retirement age does not get you that much money, so you're doing a bad thing when it comes to seniors, and you're not achieving your goal," she told CBS, adding that she was optimistic that a deal could get done before Congress adjourns for Christmas.

Pelosi and Senate Majority Leader Harry Reid pointed to Boehner to make concessions on revenues.

"To this point, there hasn't been a lot of progress, and I'm very, very disappointed," Reid said on the Senate floor Wednesday morning.


White House press secretary Jay Carney, commenting Tuesday on suggestions of vagueness in Obama's dealings with Boehner, responded by holding up copies of prior administration budget proposals that include, among other things, corporate tax reductions, and comparing them to the two-page offer that Boehner has sent to the White House.

A senior Republican fiscal hawk, Senator Tom Coburn of Oklahoma, faulted both sides for playing politics.

"There's no leadership in Washington either at the presidential level or the leadership level in Congress," Coburn said on CNN Tuesday night. "People are playing to the media rather than playing to the future of the country."

Republican Senator Rand Paul of Kentucky suggested in a Fox News interview late on Tuesday that, to get things moving, the House vote on the stickiest issue - whether to extend expiring tax cuts to all taxpayers except high-earners, as Democrats want, or to everyone, as Boehner wants.

Republicans would simply vote "present" on the Democratic plan, he said, allowing it to pass.

Let the Democrats approve a tax increase on upper-income taxpayers, Boehner said.

But "do it with their votes, not our votes," he said. "Republicans vote present in the House. Democrats can pass the tax increase with only Democrat votes and then the Democrats are the parties of high taxes and the Republicans are the party of lower taxes. And I think that's the way it should be."

(Editing by Xavier Briand and David Storey)

We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/
Comments (3)
jaham wrote:
Of course it remains cloudy – what did you expect?

We have a President focusing relentlessly on taxation even though he knows serious spending cuts and entitlement reforms need to be made…did you really expect the POTUS who added more dollars to our federal debt than any other in history to actually cut spending? LOL, don’t hold your breath.

My prediction: The GOP will make a strategic retreat and let the Dems craft and pass whatever tax increases they want so that they will have to own the fallout from raising taxes on a weak economy, just like Obama himself said you shouldn’t do:


Dec 12, 2012 3:24pm EST  --  Report as abuse
TheNewWorld wrote:
Obama is asking for $50 billion more in stimulus spending. He is spending the money from the rich rather than getting the deficit down. This is why there will be no deal. He doesn’t want the deal.

Dec 12, 2012 5:04pm EST  --  Report as abuse
soldier78759 wrote:
Perfect Washington scenario, work on the insignificant and let the most significant just die. No budget from Senate in four years because that would wreck their boat. We need elected officials with a set of you know what to address real issues.

Dec 12, 2012 7:11pm EST  --  Report as abuse
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

California state worker Albert Jagow (L) goes over his retirement options with Calpers Retirement Program Specialist JeanAnn Kirkpatrick at the Calpers regional office in Sacramento, California October 21, 2009. Calpers, the largest U.S. public pension fund, manages retirement benefits for more than 1.6 million people, with assets comparable in value to the entire GDP of Israel. The Calpers investment portfolio had a historic drop in value, going from a peak of $250 billion in the fall of 2007 to $167 billion in March 2009, a loss of about a third during that period. It is now around $200 billion. REUTERS/Max Whittaker   (UNITED STATES) - RTXPWOZ

How to get out of debt

Financial adviser Eric Brotman offers strategies for cutting debt from student loans and elder care -- and how to avoid money woes in the first place.  Video