Fiscal Cliff Talks Appear Stalled
With just about a month to go before we hit the "Fiscal Cliff." things don't look good at all.
The discussions between the White House and House and Senate Republicans over a possible deal to avert the so-called fiscal cliff appear to have hit what is likely to be only the first of many impasses. The process appears to have started unraveling Wednesday evening, when Treasury Secretary Timothy Geithner, representing the White House, met with the leadership of the House and the Senate GOP Caucuses and presented what was apparently the White House’s opening offer in the negotiations. To put it mildly, the Republicans present were less than impressed:
Treasury Secretary Timothy Geithner presented a tentative offer from the administration to congressional leaders Thursday to avert the fiscal cliff — but the plan has so far received a chilly reception from Republicans.
The offer, the details of which were reported by The New York Times on Thursday, proposes $1.6 trillion in tax hikes over ten years, roughly $400 billion in cuts to entitlement programs such as Medicare, and would withdraw Congress’ power to control increases to the federal debt limit.
Of the latter provision, Republican Sen. Orrin Hatch told BuzzFeed, “I don’t think anybody will agree to that.”
“We should come up with an alternative to the debt ceiling,” he added, but declined to elaborate.
President Barack Obama has expressed his intent to sign legislation to avert the fiscal cliff only if Congress raises the debt ceiling as part of the package. That would prevent a possible reprise of last summer’s infamous debt-limit fight when the nation needs to increase its debt limit again in February or March.
Sen. John Cornyn, the newly elected Republican whip, said raising the debt limit as part of an eventual fiscal cliff deal would “make sense.”
But, he said, echoing earlier remarks from House Speaker John Boehner, the administration’s offer as it stands is “totally inadequate.”
“I don’t think he’s serious,” Cornyn said. “I’m inclined to believe they likely want to run off the cliff, and I hope that’s wrong. But I don’t see the actions of a serious negotiator or a leader.
Today, Speaker John Boehner said that the talks had hit a stalemate:
WASHINGTON — House Speaker John Boehner said Friday that fiscal cliff negotiations have stalled and that a week of on-and-off talks and noisy political maneuverings by both sides have achieved no results.
“There’s a stalemate,” Boehner told reporters in a press conference after President Barack Obama’s speech. “Let’s not kid ourselves.”
Later, House Minority Leader Nancy Pelosi said she hoped Boehner did not mean talks were indeed in a “stalemate.” “Maybe that’s a figure of speech,” she suggested.
“We all know what is at stake here,” Pelosi added. “So why are we stalling?… I don’t know what the wait is for.” The minority leader said she will try to push the middle class tax cut extension to the House floor for a vote next week, which would require a petition.
Since Treasury Secretary Timothy Geithner presented the administration’s initial offer to congressional leaders Thursday, Republicans have panned the proposal, calling it “inadequate” and “not serious.”
On Friday, Boehner insisted that those comments weren’t simply political posturing, as some Democrats have charged. Boehner also indicated that Republicans remain open to further negotiation.
Ezra Klein agrees that the Administration’s proposal isn’t serious, but argues that this is entirely the point of the offer that was made earlier this week:
Previously, Obama’s pattern had been to offer plans that roughly tracked where he thought the compromise should end up. The White House’s belief was that by being solicitous in their policy proposals, they would win goodwill on the other side, and even if they didn’t, the media would side with them, realizing they’d sought compromise and been rebuffed. They don’t believe that anymore.
Perhaps the key lesson the White House took from the last couple of years is this: Don’t negotiate with yourself. If Republicans want to cut Medicare, let them propose the cuts. If they want to raise revenue through tax reform, let them identify the deductions. If they want deeper cuts in discretionary spending, let them settle on a number. And, above all, if they don’t like the White House’s preferred policies, let them propose their own. That way, if the White House eventually does give in and agree to some of their demands, Republicans will feel like they got one over on the president. A compromise isn’t measured by what you offer, it’s measured by what the other side feels they made you concede.
The GOP is right: This isn’t a serious proposal. But it’s not evidence that Obama isn’t serious. He’s very serious about not negotiating with himself, and his opening bid proves it. Now that they’ve leaked his initial offer, the next question is obvious: What’s their offer?
I get what Klein is saying here, but I’ve got to wonder about the logic of the Administration opening with an offer that has absolutely no chance of passing Congress and which really just amounts to a gigantic thumb in the eye to the GOP. For one thing, it’s likely to reinforce the position of the hardliners in the GOP caucus and make it far more difficult for Speaker Boeher and Minority Leader McConnell to negotiate a deal of any kind that would keep their respective bases in line. To the extent that they do respond to this offer, it’s likely to be with something that is equally unacceptable to Democrats and equally unlikely to make it through the Senate and past the President’s desk. So, while I understand the brinkmanship argument that Klein is making here, I’m not sure that, if this is what the White House has in mind, it’s really going to make any of the parties involved more likely to make a deal.
I still believe that the President has the superior bargaining position in these negotiations, and that it’s the GOP that is likely to get the blame if we get to the end of the year without a deal of some kind. However, it strikes me that the Democrats are taking a risk here by starting out with a fundamentally ridiculous proposal because it tends to put into doubt the public’s belief that they are the serious ones in these negotiations. If that continues, it could end up being the case that both sides will end up getting blamed for whatever goes wrong after December 31st.
There were many on the left who wanted Obama to open harder. There were many (James?) on the right who thought that genuinely crazy suggestions from that side were valid “starting positions.”
It seems the “starting position” folks are hosted by their own petard.
As I understand it, Republicans think they can stand back and say to Obama “wait, wait, YOU should suggest cuts.” They think they can win without risk, just shooting things down. Well, bluff called. Put up or shut up.
As an obvious matter of fact, Obama’s position is the middle position.
This is just more of the same from Speaker Boehner – he can’t get buy in from his House members on anything that includes letting only the tax rate on incomes over $250,00 go back to the Clinton year’s level. I hope the president learned his lesson from the 1st term – it’s hard to compromise with people who want no part of compromise.
From what I can tell, the republicans want the president to negotiate with himself until he reaches a deal that the republicans like. That is not how it works, especially after the election. The president has put forth his plan, now the republicans need to counter. If the wanted to start from a different point, they should have beat the president to the punch. If the republicans wa t deeper cuts, they need to say exactly what they are. You want a seat at the grown-up table, you need to act like grown-up
And this my friends is how you use politics to hedge what could become a public relations nightmare for conservatives! You can already see that 99% of the conservative are using this arguement to somehow try to flip the tables and its total BS!
Negotiations 101: Person X presents proposal A. Person Y counters proposal A with proposal B. Not cry about how rediculous proposal A appear to be. How could anything be accomplished by using that tact? This is pure politics on the right. Republicans did not go along with the grand bargain agreement which favored their policies last year. And now they’re upset that Obama, coming off of another election win, will not lay down? Seriously? Lets just break until January and we will see whos sweating from the pressure!.
As Klein notes, one of the criticisms about Obama that was made by many people during his first term was that he tended to open with a compromise proposal. @Doug you wrote about this during the debt ceiling debacle.
So what he’s done is actually make an initial offering that isn’t a compromise for once. And given that it’s “unrealistic”, it also opens the possibility for Republicans to earn credit with their base for winning lots of concessions. But that’s if they’re willing to be pragmatic and political. As we know that sort of thing isn’t big with a number of the “true believers” who have joined the caucus since the 2010 elections.
The problem for Boehner is that he still has to manage a number of members who are opposed to compromise. And chances are — thanks to gerrymandering — he’s going to have to deal with those members for the foreseeable future (or at least until the Democrats take back the house, Democrats take over state governments and can redistrict, or the Census forces redistricting… since we all know that election reform probably won’t happen any time soon).
@David: That’s pretty much it. The GOP wants the President and Democrats to own the whole deal so that they can blame them for it if it all goes bad.
It amazes me that people can still write sentences like this in this day and age. Doug, have you not noticed that literally every single thing the GOP-led Congress has proposed for the last four years has been nothing more than a gigantic thumb in the eye to Obama (and a giant middle finger to all Americans)?
You hear that noise? It’s the Schadenfreude Express, and it’s only making its second stop on the grand Republicans Are Wrong About Everything tour… Get your tickets now!
@Vast Variety: I think you’re right, but I don’t think the GOP realizes that this can be a two-edged sword. If Obama does something that actually turns out to be successful, the GOP is screwed. The American public already knows what it looks like when Republicans actively sabotage the economy, and when they try to destroy the country just to make Obama look bad this time, there will be a lot more noise from the peasantry…
@john personna:
And that might be workable, if we were six months from the “fiscal cliff” rather than one.
I agree with Klein–it’s not a serious proposal, but that doesn’t mean the President is unserious. It’s pretty much standard to “ask for the moon” and end up meeting somewhere in the middle, but it takes time, and that is a luxury we no longer have.
For one thing, it’s likely to reinforce the position of the hardliners in the GOP caucus and make it far more difficult for Speaker Boeher and Minority Leader McConnell to negotiate a deal of any kind that would keep their respective bases in line.
You believe the “hardliners in the GOP caucus” were willing to accept anything except massive tax cuts for the rich and the elimination of Social Security, Medicare and Medicad?
Yours is the ridiculous position. Stupid too.
“To the extent that they do respond to this offer, it’s likely to be with something that is equally unacceptable to Democrats and equally unlikely to make it through the Senate and past the President’s desk.”
Wait, the GOP has already done that. They’ve proposed that Obamacare be repealed as part of the resolution. They’ve proposed that the Bush tax cuts be made permanent. they’ve proposed that no revenue be raised, except through growth.
Where’s the “Both Sides Do It”?
Obama tried good faith. It didn’t work. Time for a new strategy. The Republicans in Congress ought to be squirming right now.
An end to the debt-ceiling should be non-negotiable. There’s no good reason to allow Republicans a second shot at forcing default on a nation that can always pay its bills.
I’m pretty sure he’s gotten some good input from Bill Clinton, who IIRC, oversaw a government shutdown that resulted in the destruction of his enemies in the house + a booming economy + a balanced budget + BJs from interns.
Can’t really argue with that record of success.
Obama doesn’t have to do anything. Wait a month, and taxes go up on the rich and military spending is slashed. Yeah, there are things he doesn’t like, too — but if the Republicans don’t make a serious offer, they lose automatically.
Maybe they should have thought about that before suggesting we balance the budget by adopting the plan that Mitt Romney just ran and lost on.
@Crusty Dem:
Sure you can.
@Ben Wolf: A better answer would be, “you had me at BJ’s from interns”.
Screw it.
Let the GOP hold all of America hostage for the 2%.
Then we all lose.
Dems step up after, and give the new “Obama tax cuts” to the Middle Class.
And, they redefine military spending as well.
Why?
It’s about time somebody pulled the chair away from the GOP and let’s em fall flat on their fat asses.
Sad, sad, sad. The partisanship of the comments on this and other sites illustrate why we have the government we have. It is truly a representative government. Americans will excuse any behavior that comes from their side of the isle. A politician can say or do anything and 40% of the people will instantly run to their defense. I think we should raise taxes and cut spending (I’m probably wrong though). Who should I vote for?
Long term, I think we might be better off going over the fiscal cliff. There are things I don’t like about it, but…
It raises taxes, which is needed to balance the budget, but otherwise impossible to do with the Republicans pledging fealty to Norquist.
It starts cutting defense spending, which is likewise needed and impossible to do.
If the President’s proposal isn’t something the Republicans can or will accept, then the Republicans have to offer something they will accept.
There are two sides: the Republican Congress and the President. One has to get re-elected, the other doesn’t. Advantage POTUS.
The GOP has to decide which they fear most: being primary-ed by Tea Party crazies, or pilloried as the do-nothing, middle class tax-raising, defense-cutting Congress by an eventual Democratic opponent.
Guys in safely gerrymandered seats will fear being primary-ed more. Guys who have to run statewide in swing states, or who won re-election by 5 points or less will fear the latter. If someone can do the sum of all fears on that, we’d know how the GOP will roll.
@Crusty Dem: I didn’t want to be obvious about it.
Hey, elections have consequences…..
If I remember correctly, Woodward reported that the 2011 talks failed when Obama asked for $1.2 trillion in revenues rather than $800 million.
So I’m not sure why a $1.6 trillion opening bid from Obama is so outrageous. He wanted, and apparently still wants, between $1 trillion and $1.2 trillion in new revenues as part of any deal. Starting somewhat higher than the result you expect to end with is the first lesson of Negotiation 101.
@wr:
Given the past behavior of the GOP in Congress, I don’t really understand how anyone could have expected anything else from Obama.
And exactly what the frick does Boehner and McConnell have to do before people stop treating them like reasonable, well-intentioned leaders who only want what’s best for the country?
Mike
@MBunge:
FIFY
Shorter GOP – The 2012 election gave Obama a mandate to agree to everything that we want.
Meh. This is a big dog & pony show. And related thereto it’s also the means by which Team Obama and Team Democrat can get head starts on fundraising for the ’14 mid-term cycle.
Wait until Social Security goes full Hiroshima and we’re faced with the following slate of Hobson’s choices: raise payroll taxes (and thereby directly reduce hiring and growth), cut benefits for then-existing beneficiaries (political suicide even for Democrats), or put the system back on budget and hike all taxes to pay for it (and thereby destroy the entire economy for once and for all).
And the notion that Gen. Y somehow will be able to support the Boomers and Gen. X patently is absurd. How exactly will they do that? Living at home until age 30 and having no more than a coin flip chance of becoming tenured baristas are not exactly platforms from which vibrant tax bases are forged.
When a giant social welfare program will spend a lot more than it’ll take in, even using Pollyanna assumptions about future growth and future net hiring, then you don’t need an advanced mathematics degree to figure out the system is FUBAR and is heading for an epic train wreck of a toxic disaster.
Social Security not only is a “fiscal cliff,” it’s a fiscal Marianas Trench.
All part and parcel of the big decline.
What!? And take away from Republicans a weapon that they can use to bash the President? Perish the thought…
Which taxes and on whom? What spending?
Exactly…that’s hardly “partisanship” or “excusing any behavior that comes from their side of the aisle” or “instantly running to the defense of a politician who says or does anything”…
@Tsar Nicholas:
Social Security is on solid financial footing, and any fixes required will be minor. Health care costs are a much bigger problem.
Oh look, another smoking gun turning into a mushroom cloud…we’ve certainly heard that song and dance before…
Some conservastives really, really, REALLY HATE Social Security…their ilk have been badmouthing it for almost 80 years…
@Tsar Nicholas: Good old Tar Nicky: spreading ignorance and misinfornation wherever he goes.
@Ben Wolf: Whereas I just spread spelling errors.
misinfornation = misinformation
@Tsar Nicholas:
Don’t forget that the soldiers fighting Boomer wars around the world are almost enitrely from Gen Y. The biggest difference between Gen Y and the Boomers is that when their war came, they didn’t run away to hide in Canada.
@Scot:
Thanks for telling us nothing. Which comments here do you find objectionable? Which side – Administration or House Republicans – is being unreasonable?
Can you imagine Thanksgiving dinner at the Tsar’s house? Probably wouldn’t even bother cooking the turkey cuz we’re all gonna die anyway.
For the next two weeks, I expect that the Republicans and the Very Serious People will tut-tut the President’s proposal and will say that the decent thing would be for the President to negotiate with himself. After a couple of weeks, the VSPs will start to murmur that maybe the President is serious and the Republicans should at least make a serious counter offer. Three days out and the Republicans will be caving with minimal concessions from the president.
No one deserves a giant thumb in the eye more than the house Republicans.
if obama had any nads he’d just deal with the real issues and start fixing the mess. he already won and is a lame duck so who cares if he re-negs on all the promises he couldn’t keep again?
we’re broke and taxing all the millionaires at 100% won’t solve anything aside from his lame “line in the sand” stand he made.
a sea of “entitled” people is drowning the entire country and nobody seems to care as long as they get theirs.
@ bill
Seriously dude, if I want to hear this nonsense, I will tune into Bill O’Reilly. At least he presents it with a tiny bit of style…
maxwell:
It might be outrageous by virtue of being outrageously low. Not everyone realizes it’s $1.6T over 10 years, or just $160B/year. That’s less than 25% of what we could raise if we returned to 1953 rates, for just the top 1%.
In 1953, if you had income over $700 thousand (in 2012 dollars), your effective individual tax rate (federal income tax) was roughly 45-50% (pdf; see page 20 in your pdf reader). What is that number now? If you’re in the top 1% (income of at least $353 thousand), the average individual tax rate is 19% (pdf, p. 6).
The 1.2 million households in the top 1% have average pre-tax income of $1,873,000 (same source), which means the aggregate income of this group is $2.2T. If their effective rate was raised from 19% to 50%, 31% of their income would become additional tax revenue of $680B/year. The deficit for FY12 was $1.1T.
Summary: if the top 1% was paying the effective rate they paid in 1953, roughly half the deficit would go away. But Obama’s supposedly extreme opening offer is to ask for much less than this.
bill:
This ignorant claim is made quite often, in many different forms, but I just proved how ignorant it is.
So dumb to call this raising taxes. The current rates were never meant to be permanent! Letting them expire now for those who are better off makes sense, and then when we are close to full employment, let them phase out for other income brackets. I love how no one talks about the payroll tax expiration. That is 100B right there, or how they don’t talk of cap gains, dividends or carried interest.
Anyone notice how they tabulate tax hikes over a decade but calculate cuts per year to make the offer seem more unreasonable. In fact we seem to have 4 trillion entitlement cuts to 1.6 trillion tax increases. Or am I reading this wrong?
The voters just put a gigantic thumb in the eye of the GOP – were you not paying attention?
After 4 years of reflexive obstruction and the least productive Congress ever the President is supposed to bend over and give the Republicans anything? Fu&k them. Let’s go over the imaginary cliff.
The Presidents problem is that he is dealing with an entire opposition party with IQs like Billy’s.
You can’t fix stupid.
I shouldnt have singled out bill…IQ’s equivilant to bill and Tsar and Jenos and Florack.
Not all Republicans are stupid fu&ks…but if you are a stupid fu&k you are probably a Republican.
@Stormy Dragon:
Let me get this straight: Afghanistan and Iraq are “Boomer Wars” because “Boomers” started them (except that Afghanistan was started by Al Qaeda). Vietnam was also a “Boomer War” because….
Seriously, Stormy, that makes no sense at all. You want to bash the “Boomers”. OK. Now, use logic to do it.
PS: Also, this:
58,282 KIA or non-combat deaths (including the missing & deaths in captivity)
303,644 WIA (including 153,303 who required hospitalization and 150,341 who didn’t)
1,655 MIA (originally 2,646)
725-779 POW (660 freed/escaped, 65-119 died in captivity)
So, Fwck Off.
Hey Mitch, John, you are the leaders of your party. Now lead.
Yes. I think Rs basically come in two flavors: stupid fu&ks (e.g., Jenos) and lying plutocrats (e.g., Mitt). The latter fleece and lead the former. Of course there are variations on this, e.g., lying fu&ks and stupid plutocrats. Trump would be an example of the latter.
@anjin-san: how so, nothing has “changed” in dc- same house/senate/prez – and same problems/lack of presidential leadership. even clinton figured how to deal with people who didn’t care for his views/polices.
@C. Clavin: when you can’t make a point, just call people names. that shows everyone just how smart you are!
but seriously, how is taxing the $250k+k crowd going to do anything to make us fiscally solvent? a few years ago democrats hated the Bush tax cuts because they “favored the rich”, why not let them end if there’s no benefit to “the poor/middle class”?
@bill:
@OzarkHillbilly: Maybe I need to repeat myself: “Hey Mitch, John, you are the leaders of your party. Now lead.”
bill:
But seriously, how many times do I have to remind you that this question has already been answered? Also see here.
Obama ran on a tax increase for the wealthy. He won in a landslide. This is after years of conservatives telling us that Obama would be utterly repudiated and tossed out of office on his ear in the 2012 election because everyone hated his policies so much…
@bill:
Thank you for the reminder. And what exactly was the reward for Bill Clinton? House Republicans impeached him.
@ bill…
When you are so obtuse…there is nothing left but to call you out for what you are.
For instance you do not seem capable of understanding that the Bush tax cuts…which are the single biggest driver of the deficit…can favor the wealthiest Americans…and also benefit the middle-class.
Look up the Dunning-Kruger Effect and try to understand it.