Barack Obama and John Boehner must come together on tax rates and more to avoid the fiscal cliff. PHOTO: Reuters
Don’t look now, but actual negotiations are starting to happen. After spending several days in a flustered huff, Speaker of the House John Boehner came out with a counter proposal on a fiscal cliff deal. Tax rates would remain the same under the Republican plan, but revenue would increase $800 billion (half of the revenues in Obamas plan), presumably from capping tax deduction limits. Additionally the Republicans offered another $600 billion in savings from altering a formula that determines government health benefits and another $600 billion in cuts, split between mandatory and discretionary spending. These cuts, Boehner wrote, would be “over and above” the sequesters built into the “Budget Control Act,” aka, the thing that created the fiscal cliff in the first place.
That tax rates would remain the same under Boehner’s fiscal cliff plan will be a non-starter for the White House. Obama has thrown all his weight behind raising taxes on the top 2% of Americans (by letting the Bush tax cuts expire for them on Jan. 1, 2013), and to reverse course now would look awfully sheepish. The GOP also did not include Obama’s proposal to allow the government to raise the debt ceiling on its own, nor did they put in a raise of the debt ceiling temporarily into their offer. Democrats remember the fiasco of trying to raise the debt ceiling through a Republican-controlled, uncompromising House, and would like to avoid a repeat of that by including raising the debt ceiling in any fiscal cliff deal.
So, now both sides have asked for everything. Democrats want tax rates to go up on the richest 2% in any fiscal cliff deal, as well as the power to raise the debt ceiling, more stimulus money and relatively modest cuts. Republicans want no change in tax rates, huge cuts and no movement on the debt ceiling. To call this “negotiating” may be optimistic, but at least the two sides are trading proposals. They are nowhere close to where they ought to be with less than a month to go, but what do you expect from a permanently intransigent House facing off against a newly emboldened President?