Fiscal Cliff Deal? Don’t Hold Your Breath

Washington is abuzz with the possibility of a bipartisan détente. Don't bet on it

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Brendan Hoffman / Getty Images

House Speaker John Boehner makes remarks on Capitol Hill in Washington on Nov. 7, 2012

Barack Obama and John Boehner traded opening bids on Nov. 9 in negotiations over the fiscal cliff. With talks scheduled for the White House this week and members of Congress back in town, Washington is abuzz with the possibility of a deal. Don’t bet on it.

Obama and Boehner drew the outlines of a compromise less in what they said than in what they didn’t say. The two men failed to reach a deal in 2011 because they couldn’t agree on raising tax rates for the rich. Now they are leaving open the possibility of avoiding the automatic tax hikes and spending cuts set to kick in on Jan. 1 by closing tax loopholes instead.

The approach got attention during the presidential campaign when Mitt Romney embraced it. Pressed to explain how he could cut tax rates and balance the budget, Romney suggested capping tax deductions, a move that would disproportionately hit the rich by limiting the amount of income they could shield from taxes. That could satisfy Obama’s demand that spending cuts be balanced by increased revenue from the wealthy. It would also allow Boehner to claim that he had fought off a raise in tax rates, which most of his members have sworn to vote against.

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When asked about the possibility of a deductions deal at the daily press briefing after Obama’s East Room appearance on Nov. 9, White House press secretary Jay Carney left the door open. “The only acceptable approach to dealing with our fiscal challenges,” Carney said, “is to take a balanced approach,” and he pointed out that previous plans from the President included limiting deductions. Boehner, for his part, answered the same question about deductions by opening the door even wider. “There are all kinds of deductions, some of which make sense. Others don’t,” he said.

A deal based on deductions would reflect the atmospheric conditions in Washington postelection: prevailing winds seem to favor bipartisanship and compromise. But at the ground level, things look less temperate. First, it’s easy to talk about eliminating deductions but harder to pick a number that would generate real revenue without raising effective tax rates on the middle class too. Romney proposed capping deductions at $17,000, which would generate $1.7 trillion over 10 years, according to the Tax Policy Center. But that could hit anyone making $100,000 a year or more, whose deductions average $20,000 annually. Obama has called for tax hikes only on those making over $250,000 a year.

And once you start disagreeing on details, political reality quickly replaces high hopes. In the House, not a single vote has changed since Congress and the White House failed to reach a deal in July and August 2011. The GOP is going to be more conservative in the next session, a reality Boehner is very much aware of.

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Obama is not in the mood to make the big concessions. Tax policy played a large role in the election he just won, and the fiscal cliff gives him some negotiating advantages. Even if tax rates go up on paper on Jan. 1, no one will lose money until April 15, providing a buffer. And while the sequester, or mandatory government spending cuts, will hit the Pentagon hard, on the non-Defense side, they will exempt 47 social safety-net programs, including Medicaid, child support and many other low-income benefits.

Even if Obama were willing to go along with a deductions deal, some House Democrats are bound to revolt against the GOP demand that entitlements like Medicare and Social Security be cut as part of any deal.

Maybe both sides are tired of fighting and ready to negotiate in good faith. Maybe they are interpreting the election as a call to compromise. But these days in Washington, it doesn’t take long for partisan interests to reassert themselves.

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533 comments
dan7
dan7

I believe its time President Obama and the Democratic Party calls the bluff of the Republican propaganda. Let the Bush Jr tax cuts expire and cut military spending and entitlements. The Republicans predicted doom and gloom back when Clinton raised taxes on the rich. Not one Republican voted for it and look what happened. 20,000,000 new jobs were created. So why don't the Democrats tell the Republicans, bring it?

OzarkGranny
OzarkGranny

If it wasn't for Paulejb there would be no comments here. 

lorax2
lorax2

Before it was a "fiscal cliff" it was  "sequestration." Before it was sequestration it was the Budget Act of 2011 - which was negotiated by Obama and Bohner and signed by Obama (and voted against by half of the Democrats in the House). Now it's "Oh, no, Mr. Bill! Save us from the fiscal cliff!"

Mr. Bill: "Hey, kids. do not fear. I will save you. We will throw the seniors and those who didn't vote for me off the bus. We will not go over the cliff (Aside: which I helped create. Wa, ha, ha, ha!)"

Everyone go: Wuhoo, ho, ho, ho, ho!  Whaaa, ha, ha, ha, ha! (The joke's on us.)

jrcsamad
jrcsamad

If you favor raising taxes on those that make more than 250K per year, contact your Congressman.  I have.

akpat
akpat

We need a 50% cut in miltary spending per year. A 50% cut in non SS/med entitlements per year, a 100% cut in pork per year and after that we would need to raise taxes on the wealthy, corporations and imports to balance the budget.

this is not a fiscal cliff it is a small hill

wesleymccants
wesleymccants

Increasing taxes and cutting spending for more than 100 federally funded programs nationwide spells doomday in America. My mother used to tell us kids in the fifties and sixties you can't get blood from a turnip. Is it possible to raise enough federal revenue when one third of the work force is unemployed or underemployed and still avoid the fiscal cliff? Not to mention those that have given up looking for work. Why won't Congress and the Speaker listen to the OMB? 

www.globalbabbler.com   

JohnYuEsq
JohnYuEsq

75% TAX on 1%; NOW!  It's only FAIR.

ahandout
ahandout

Where is fearless leader?  Has he made any proposals on what to cut?  It's the same old campaigner in chief in charge.  Obama waits for others to lead and then demagogues their efforts.  Such a great leader.  No proposals, no bills, no negotiations, no compromise.

But, he has plenty of time for golf.

josephblow1
josephblow1

I don't think the fiscal cliff if not resolved will be the crisis that it is made out to be.  What this will do is reverse the Bush tax cuts to Clinton era levels and reduce spending including defense which should happen anyways.  This will greatly reduce the deficit and restore confidence in America's fiscal solvency.

ahandout
ahandout

@OzarkGranny  True.  The liberals sit around and stare at each other and wonder what to do next, just like Obama and his administration. 

TyPollard
TyPollard

@akpat 

Can my parents come live with you because they won't be able to afford their modest home if the SS benefits they have EARNED are cut in half?

Thank you in advanced.

DonQuixotic
DonQuixotic

@paulejb 

Mother Jones co-editor Clara Jeffery mused, "Daniel Tosh taken over?"

Do you appreciate the irony that you agree with Mother Jones on this?  What a silly non-issue.

La_Randy
La_Randy

@paulejb Maybe we should look at which party wants to reduce food assistance for the poor with the policies they propose. Who would that be?

Sue_N
Sue_N

@ahandout @OzarkGranny Aw, ain't that sweet, handy is pauley's fanboy!

Though it's not true about the comments. We had a fine old time here without him while he was sitting in the dark and weeping over his poster of Willard. You should remember that. You got your pointed little head handed to you enough.

JohnYuEsq
JohnYuEsq

75% TAX on 1% to DISGORGE 30 years of compounded ILL GOTTEN gains from an UNCONSCIONABLY RIGGED system

MrObvious
MrObvious

@mantisdragon91

The congress is barely back, still in the lame duck and their asses are still hurthing from the ass whooping and righties are screaming 'WHAT HAVE HE DONE?"

BENGHAZI!

paulejb
paulejb

@DonQuixotic @paulejb ,

Of course it's ridiculous, but the entire Obama "war on women" campaign was ridiculous and it still it won him the vote of low information women voters.

ahandout
ahandout

@Sue_N @ahandout @OzarkGranny  Sure you all are so boring that you barely broke the 300 comment mark on the article announcing Fearless Leader's re-election.  There will be other elections, Sue.  Remember 2010. 

Ohiolib
Ohiolib

@ahandout @MrObvious @mantisdragon91 

That's because all bills that deal with taxation and spending begin with the House. Quit blaming the senate for the incompetence and stupidity of your own party. 

ahandout
ahandout

@MrObvious @mantisdragon91  The senate hasn't proposed a budget in 4 years.  Great leadership there.  The fiscal cliff comes up in December.  So, you lame ducks (almost all returning) and fearless leader need to do a deal.  The president needs to lead now; the endless campaign is over. 

ahandout
ahandout

@Sue_N @ahandout @paulejb @DonQuixotic  Do you understand how insurance works?  Health insurance works the same way that car, home, fire, or any type of insurance works.  Everybody pays into a pool, if more money leaves the pool, it's time to fill it up again, by raising all members payments.  

Now do you understand?  Or, do you need to go back to elementary school for a do over?

ahandout
ahandout

@Sue_N @paulejb @DonQuixotic Sure THEIR insurance will give them FREE birth control...for a price.  Nothing is free.  It will just increase the cost of insurance coverage.  What else should be free?  How about heart transplants, sex change operations?  flu shots, why not just make everything free?  Free food, gas, houses, yachts...

I want to start a political party for the obese that demands that you pay for all the food that they want.  It's a sure winner. 

Hollywooddeed
Hollywooddeed

@ahandout @Hollywooddeed Hypocrite, I told you yesterday I don't watch Chris Matthews. Why don't you condemn Willard Romney? He supported Mourdock.

MrObvious
MrObvious

@Sue_N

paulejbs entire point is agitation. His brand lost - ass reamed and sore and he comes here to stir up trouble to make himself feel better.

He'll be eating paste by the next ass reaming in 2016 when Hillary spanks whatever mediocre window licker GOP runs.

Sue_N
Sue_N

@paulejb @DonQuixotic And there you go again, missing the point (or maybe you really are just too dense to get it). What women want is for their insurance, which they pay for, to cover contraception for which they have to get a prescription and which is expensive. Nobody wants you to pay for their condoms (though we do perhaps wish your parents had paid for some).

It is just ignorance on your part to insist that having their insurance cover that is in any way making anyone else (like you) pay for it, unless you believe that you are also paying for, say, my treatment for bronchitis or knee surgery.

But you just keep on spouting this kind of idiotic drivel. The more you expose your own side as the party of stupid, the better for the rest of us.

MementoMori
MementoMori

@paulejb  "low information women"

 And paulie has learned nothing. Good luck in 2016, loser. You'll need it.

Hollywooddeed
Hollywooddeed

@paulejb @DonQuixotic And when the GOTP and Willard Romney supported Akin and Mourdock, women and rapists all over the country knew that Republicans were finally supporting the reproductive rights of rapists.

DonQuixotic
DonQuixotic

@paulejb @DonQuixotic 

It's not ridiculous when Republican candidates come out against rights granted to women, or tell them what to do with their bodies.  Of course the fact that you're comparing a statement that has nothing to do with rape with those made by men like Akin that are explicitly about rape is silly.

outsider
outsider

same doom and gloom bs. you said the dems would lose the election, and you were wrong. and you are wrong for thinking the dems will miss out now that the electorate gave them a mandate.

as mo said - you have been wrong about every large point - at least since you started posting here.

paulejb
paulejb

@MementoMori @paulejb ,

Santa won the election, Mori. The folks will be disappointed when Christmas doesn't come for them after all.

MementoMori
MementoMori

@paulejb   "How can anyone hate dupes? They don't evoke hate, they evoke pity, Don."

They only 'dupe' here paulie, is you. Or was Fox, Rush, Rasmussen, and all your other 'news' providers right and you actually won the election?

You have no credibility and no one's pity, paulie.