Monday, December 24, 2012

John Barrasso On Fiscal Cliff: Obama Wants To Go Over The Edge

A Republican lawmaker working on budgetary issues told "Fox News Sunday" that he believes President Barack Obama wants to go over the so-called fiscal cliff at the end of the year, and may not be negotiating in good faith.

Sen. John Barrasso (R-Wyo.), the chairman of the Republican policy committee, told Fox's Chris Wallace that he expects the U.S. will go over the cliff.

"I believe the president is eager to go over the cliff for political purposes," Barrasso said. "I think he sees a political victory at the bottom of the cliff: He gets all this additional tax revenue for new programs, he gets to cut the military, which Democrats have been calling for for years, and he gets to blame Republicans for it."
For the past week, Republican Speaker of the House John Boehner worked to pass what he called Plan B, a tax deal that had no chance of receiving presidential approval, in an attempt to twist Obama's arm ahead of the end of the year, when the Bush tax cuts expire.

That plan failed when Boehner could not wrangle enough votes from the more conservative elements of his caucus, leaving Obama to plead with House Republicans late on Friday to sign off on at least a limited package of tax cuts for the middle class, before everyone sees their taxes rise.

Sen. Kent Conrad (D-N.D.), the chairman of the Senate Finance Committee and who appeared on the show as the Democratic counterpoint, responded that responsibility for making a deal lies with more than just the president, and that Congress needs to show more willingness to meet Obama halfway.

"We only have nine days left here," Conrad said. "When are we going to get serious about actual solutions?"

Despite the amplified rhetoric about a fiscal "cliff" that could possibly doom the American economy, few in Washington seem to be treating the imminent tax hikes as a true doomsday. Many politicians are on holiday this weekend, and the Sunday shows -- normally a major battleground for political disputes of this sort -- were populated largely with bit players in the debate.

And as The Huffington Post's Ryan Grim reported Saturday, there are no signs that federal agencies are preparing any major changes ahead of the deadline, suggesting they do not anticipate any direct fallout from the sequestration that goes into effect at the end of the year.

Monday, December 17, 2012

Fiscal Cliff: Obama Declines Boehner's Proposal of Raising Rate for Earners Making $1M

Signaling new movement in "fiscal cliff" talks, House Speaker John Boehner has proposed raising the top rate for earners making more than $1 million, a person familiar with the negotiations said. President Barack Obama, who wants higher top rates for households earning more than $250,000, has not accepted the offer, this person said.

The proposal, however, indicated progress in talks that had appeared stalled. The person would only discuss the plan on the condition of anonymity because of the sensitivity of the negotiations.

As part of a broader budget deal, Boehner is still seeking more spending cuts than Obama has proposed, particularly in mandatory health care spending. Boehner has asked for a long-term increase in eligibility age for Medicare and for lower costs-of-living adjustments for Social Security.

Boehner's tax proposal was first reported by Politico.

A Boehner aide would not comment on the report.

At issue are expiring tax rates that would automatically increase on Jan. 1 for virtually every income tax payer if Congress and the president don't act. Steep budget cuts are also scheduled to kick in, unless Congress and Obama agree to forestall them with other deficit reduction measures.

Obama has insisted on extending current rates for the 98 percent of taxpayers in household that earn less than $250,000. He would let the top two marginal rates increase from 33 percent to 35 percent and from 36 percent to 39.6 percent for those taxpayers making over that threshold.

Until now, Boehner had maintained his opposition to raising any rates. Instead, he had proposed to raise up to $800 billion in tax revenue over 10 years by limiting tax loopholes and deductions as part of a broad tax overhaul.

But the speaker and House Republicans have come under increasing pressure form a number of Senate Republicans who say they should yield to Obama's demand on tax rates and then press him for additional cuts early next year in exchange for an increase in the nation's borrowing limit.

Obama has proposed about $600 billion in spending reductions over 10 years, including about $350 billion in Medicare and other health care savings. But he has also proposed about $200 billion in additional spending, including aid to the unemployed and to struggling homeowners and for public works projects.

Monday, December 3, 2012

Cliff jumping with Obama

Why are Republicans playing the Democrats' game that the "fiscal cliff" is all about taxation?

House Speaker John Boehner already made the preemptive concession of agreeing to raise revenues. But the insistence on doing so by eliminating deductions without raising marginal rates is now the subject of fierce Republican infighting.

Where is the other part of President Barack Obama's vaunted "balanced approach"? Where are the spending cuts, both discretionary and entitlement: Medicare, Medicaid and now Obamacare (the health care trio) and Social Security?

Social Security is the easiest to solve. So you get a sense of the Democrats' inclination to reform entitlements when Dick Durbin, the Senate Democrats' No. 2, says Social Security is off the table because it "does not add a penny to our deficit."

This is absurd. In 2012, Social Security adds $165 billion to the deficit. Democrats pretend that Social Security is covered through 2033 by its trust fund. Except that the trust fund is a fiction, a mere "bookkeeping" device, as the Office of Management and Budget itself has written. The trust fund's IOUs "do not consist of real economic assets that can be drawn down in the future to fund benefits." Future benefits "will have to be financed by raising taxes, borrowing from the public, or reducing benefits or other expenditures."

And draining the Treasury, as 10,000 baby boomers retire every day. Yet that's off the table. And on Wednesday, the president threw down the gauntlet by demanding tax hikes now — with spending cuts to come next year. Meaning, until after Republicans have fallen on their swords, given up the tax issue and forfeited their political leverage.

Ronald Reagan once fell for a "tax now, cut later" deal that he later deeply regretted. Dems got the tax; he never got the cuts. Obama's audacious new gambit is not a serious proposal to solve our fiscal problems. It's a raw partisan maneuver meant to neuter the Republicans by getting them to cave on their signature issue as the hold-the-line party on taxes.

The objective is to ignite exactly the kind of internecine warfare on taxes now going on among Republicans. And to bury Grover Norquist.

I am not now, nor have ever been, a Norquistian. I don't believe the current level of taxation is divinely ordained. Nor do I believe in pledges of any kind. But Norquist is the only guy in town to consistently resist the tax-and-spend Democrats' stampede for ever higher taxes to fund ever more reckless spending.
The hunt for Norquist's scalp is a key part of the larger partisan project to make the Republicans do a George H.W. Bush and renege on their heretofore firm stand on taxes. Bush never recovered.

Why are the Republicans playing along? Because it is assumed that Obama has the upper hand. Unless Republicans acquiesce and get the best deal they can right now, tax rates will rise across the board on Jan. 1, and the GOP will be left without any bargaining chips.

But what about Obama? If we all cliff dive, he gets to preside over yet another recession. It will wreck his second term. Sure Republicans will get blamed. But Obama is never running again. He cares about his legacy. You think he wants a second term with a double-dip recession, 9 percent unemployment and a totally gridlocked Congress? Republicans have to stop playing as if they have no cards.

Obama is claiming an electoral mandate to raise taxes on the top 2 percent. Perhaps, but remember those incessant campaign ads promising a return to the economic nirvana of the Clinton years? Well, George W. Bush cut rates across the board, not just for the top 2 percent. Going back to the Clinton rates means middle-class tax hikes that yield four times the revenue that you get from just the rich.

So give Obama the full Clinton. Let him live with that. And with what also lies on the other side of the cliff: 28 million Americans newly subject to the ruinous alternative minimum tax.

Republicans must stop acting like supplicants. If Obama so loves those Clinton rates, Republicans should say: Then go over the cliff and have them all.

And add: But if you want a Grand Bargain, then deal. If we give way on taxes, we want, in return, serious discretionary cuts, clearly spelled-out entitlement cuts and real tax reform.

Otherwise, strap on your parachute, Mr. President. We'll ride down together.