Boehner: No progress on “fiscal cliff” talks over last two weeks

posted at 1:51 pm on November 29, 2012 by Allahpundit

In case you were wondering why his phone call with O yesterday was reportedly so “curt,” here’s why. Now, a request: Paint me a picture in which the GOP’s leverage not only increases if we go over the cliff, but increases so much that it’s worth assuming the considerable political risk, and economic damage, involved in doing so. A final deal here will involve three basic parts — tax hikes on the rich, extending the Bush tax rates for the middle class, and entitlement reform. The public seems to be aligned with O on all three, i.e. they like the first two a bunch and they’re, shall we say, conflicted about the third. (In reality, Obama doesn’t “like” the idea of lower tax rates on the middle class because he knows he’ll need more from them to pay for the welfare state long-term. But that’s his current position.) Math is math, though, and the House does have some leverage, so there’ll have to be entitlement cuts of some form. Per Politico, Democratic Senate aides claim that they realize this:

There is only way to make the medicine of tax hikes go down easier for Republicans: specific cuts to entitlement spending. Democrats involved in the process said the chest-pounding by liberals is just that – they know they will ultimately cave and trim entitlements to get a deal done.

A top Democratic official said talks have stalled on this question since Obama and congressional leaders had their friendly looking post-election session at the White House. “Republicans want the president to own the whole offer upfront, on both the entitlement and the revenue side, and that’s not going to happen because the president is not going to negotiate with himself,” the official said. “There’s a standoff, and the staff hasn’t gotten anywhere. Rob Nabors [the White House negotiator], has been saying: ‘This is what we want on revenues on the down payment. What’s you guys’ ask on the entitlement side?’ And they keep looking back at us and saying: ‘We want you to come up with that and pitch us.’ That’s not going to happen.”

Sen. Dick Durbin (D-Ill.) told “Morning Joe” on Tuesday that he could see $400 billion in entitlement cuts. That’s the floor, according to Democratic aides, and it could go higher in the final give and take. The vast majority of the savings, and perhaps all of it, will come from Medicare, through a combination of means-testing, raising the retirement age and other “efficiencies” to be named later.

If we go over the cliff, do we get more or less in entitlement cuts than we would if we made a deal now? That’s the key question, it seems to me. The idea that O will buckle and extend the Bush tax rates for the rich is implausible given how much political capital he’s invested in tax hikes over the past six months; if he yanked the football away from the left when they’re this close to squeezing the dreaded one percent, they’d go berserk. He won’t budge on that. He might budge on entitlements, but will he budge more in December or in January? My hunch is that he’s more likely to budge next month, in the name of avoiding the recessionary shocks that would come with going over the cliff, than he is in January, when those shocks will have already hit. Once we’re over the cliff, chatter about a “grand bargain” will deteriorate into a clamor about the middle class suffering under a new, heavier tax burden. Entitlements will be shunted aside. O will point to the polls showing support for tax hikes on the rich, fold his arms, and demand that the House pass a bill extending the Bush rates for the middle class only. Under that sort of pressure, and given the general unpopularity of entitlement cuts, how likely is it that Boehner would be able to wring broader Medicare reforms from O rather than narrower ones?

We’re holding a bad hand here any way you look at it, but I’m thinking the best possible play might be to offer to pass a bill now that would extend the Bush rates for the middle and lower class in exchange for immediate reform to entitlements. No “promises” of future reform this time; Obama needs to sign something that’ll start to bite next year. The advantage of doing it that way is that it would essentially push the tax issue off the table and put entitlements at the center of the “fiscal cliff” debate. Let’s make the next month a referendum on how serious O is about controlling the sort of long-term expenditures that will swallow any future tax hikes.


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Comment pages: 1 2

Paint me a picture in which the GOP’s leverage not only increases if we go over the cliff,

Allah, get real. The debt limit gets hit early next year. Unless Obama’s willing to put up with a balanced budget for the nest two years, he has to give the Republicans enough so that they’re willing to compromise with him.

The starting Republican position should be: Extend the Bush / Obama tax cuts in total, and pass the Ryan budget, and we’ll raise the debt limit $1 trillion.

Read whatever polls you want, but if the economy is good, the President’s party gets the credit, if it’s bad, they get the blame. If Obama wants to trash the economy in the hope the Republicans will get the blame, let him.

Greg Q on November 29, 2012 at 6:53 PM

Nut-kicker stat of the night – if Obama gets his way and taxes go up on the top 5% (no, it won’t be the top 2% at the $200K/$250K level Obama wants taxes to go up on), the percentage of their income that will be going to the federal government will jump next year from 29% (the 32-year average between 1979 and now) this year and a 32-year-record 35% next year if nothing changes to 59%. No, that is not the marginal rate – that is 59 cents of every dollar earned by the top 5% being seized by the federal government.

Steve Eggleston on November 29, 2012 at 6:59 PM

Correction – Obama wants 39% of the top 5%’s income, not 59%.

Steve Eggleston on November 29, 2012 at 7:24 PM

At the 9min mark of the ABC clip, the anchor says Beohner seemed dismayed, “which is in contrast to the optimism President Obama and other leaders were expressing yesterday and which caused a rally in the stock market”.

Good God! So now if Obama smiles and the stock market happens to go up that day, that means Obama must have caused it?!

We really are screwed until we can reform our biased, incompetent media.

netster007x on November 29, 2012 at 10:30 PM

There is only way to make the medicine of tax hikes go

Anyone proof reading this? I know, but c’mon…

mickytx on November 30, 2012 at 1:34 AM

Good God! So now if Obama smiles and the stock market happens to go up that day, that means Obama must have caused it?!

We really are screwed until we can reform our biased, incompetent media.

netster007x on November 29, 2012 at 10:30 PM

The “stock market” is over 70% HFT algos.

Computer programs buying and selling to each other….

Think about it…

It isn’t real.

tom daschle concerned on November 30, 2012 at 8:43 AM

Comment pages: 1 2