Though he has rejected House Speaker John Boehner’s offer, which included higher tax rates on millionaires and raising the debt ceiling, President Barack Obama made a counter-offer yesterday showing some movement in “fiscal cliff” talks:
The Associated Press is reporting that President Barack Obama has made a new budget offer to House Speaker, including a significant shift from a previous sticking point in their negotiations to avert the so-called fiscal cliff.
Obama’s latest counteroffer raises the threshold for tax increases up to incomes above $400,000. That’s an increase from previous demands dating all the way back to the presidential campaign, in which Obama had called for taxes on incomes above $250,000 to return to Clinton-era rates.
Reuters reported on Twitter that Obama’s plan includes $1.2 trillion in increased revenue and $1.22 trillion in reduced spending. Boehner’s office, however, pegged the numbers at $1.3 trillion in new revenue and only $930 billion in spending cuts.
Is there some movement in talks on the so-called “fiscal cliff?” It remains unclear right now, but House Speaker John Boehner made a pretty big concession on Saturday that may provide a path to a deal. According to Politico, Boehner is willing to raise tax rates on anyone earning over $1 million in exchange for significant entitlement cuts:
Speaker John Boehner has proposed allowing tax rates to rise for the wealthiest Americans if President Barack Obama agrees to major entitlement cuts, according to several sources close to the talks.
It is the first time Boehner has offered any boost in marginal tax rates for any income group, and it would represent a major concession for the Ohio Republican. Boehner suggested hiking the Bush-era tax rates for top wage earners, including those with annual incomes of $1 million or more annually, beginning Jan. 1, two sources said.
Obama and Boehner spoke by phone Friday after a lengthy face-to-face session at the White House on Thursday. The quickening pace of private conversations between the two key players in the fiscal-cliff talks shows progress is being made in the negotiations, although they are not close to a deal yet, sources said.
Boehner also wants to use a new method of calculating benefits for entitlement programs known as “chained CPI,” which would slow the growth of Medicare and other federal health programs and save hundreds of billions over the next decade.
As noted yesterday, House Republicans have laid out their counter-proposal to the White House as negotiations continue on the so-called “fiscal cliff.” While GOP leadership seems pretty darn impressed with their plan to raise taxes by $800 billion, Sen. Jim DeMint (R-SC) has come out strongly against it:
The comments from DeMint, co-founder of the Senate’s anti- tax Tea Party caucus, represent a strong indictment of Boehner’s plan from a fellow Republican lawmaker and highlight a divide within the party. Boehner yesterday proposed a $2.2 trillion deficit-cutting proposal that seeks $800 billion in revenue in the next decade from an overhaul of the tax code that would curb some breaks.
“Speaker Boehner’s $800 billion tax hike will destroy American jobs and allow politicians in Washington to spend even more, while not reducing our $16 trillion debt by a single penny,” DeMint said in a statement. “Republicans must oppose tax increases and insist on real spending reductions that shrink the size of government and allow Americans to keep more of their hard-earned money.”
If you’ve followed the “fiscal cliff” debate, then you know that it has kicked up a debate over taxes that Republicans should win. But rather than make the case for less taxes and for entitlement reform, House Speaker John Boehner has shown a willingness to raise tax revenues, though he refuses to support raising tax rates.
But the prospect of Republicans backing increased tax revenues has caused a substantial rift with fiscal conservatives in Congress, many of whom feel that the GOP is risking economic growth and job creation by taking more money of the economy:
In order to get one with President Barack Obama — who has refused to cut a deal until Republicans agree to increase tax rates on the wealthy — the GOP may have to go even further on taxes, a prospect that could prompt a full-scale party rebellion.
“That’s a big gulp,” Senate Minority Whip Jon Kyl (R-Ariz.) said of the $800 billion in new taxes, which did not include a tax rate increase. “As long as we’re not talking about rates, there may be a way to accomplish it.”
Asked about the concerns from conservatives, Kyl said: “They are right it would hurt job creation. Absolutely right. Well, that’s the question — what is the least, worst alternative? And I don’t know what the answer to that question is at this point.”
During the debt ceiling debate last year, House Speaker John Boehner made a compromise on tax revenues, offering the White House $800 billion by closing tax loopholes, rather than raise tax rates. Boehner and at least some House Republican leaders saw the offer as necessary to reach a broader agreement on spending cuts. President Barack Obama played along, but eventually told Boehner, according to Bob Woodward, that he needed an additional $400 billion in tax revenue to make a deal work.
Boehner backed down and eventually all sides agreed on the sequestration deal — $1.2 trillion in automatic spending cuts over the next 10 years — that make up part of the “fiscal cliff” scenario that the White House and Congress are now trying to avoid.
The lesson for Boehner and Republicans should have taken from that particular situation is that when you show that you’re willing to compromise on a core economic principle, you’re almost always going to be asked to go another step. And now with many Republicans in Congress signaling their willingness to break their pledge not to raise taxes, provided that it is coupled with other fiscal reforms, Democrats are seizing the opportunity, according to The Hill, by raising their asking price in fiscal cliff negotiations by taking entitlements off the table:
Senate Democratic leaders signaled Tuesday they would not agree to any entitlement reforms before the end of the year that cut spending on Medicare and Medicaid beneficiaries.
Negotiations over the so-called “fiscal cliff” are back in full swing, but the White House and congressional leaders are no closer to an agreement on taxes and spending cuts. Just before Thanksgiving, House Speaker John Boehner told ABC News that he wants ObamaCare, President Obama’s signature domestic policy, put on the table during “fiscal cliff” negotiations. Republicans are also pushing for more transparency in the deal-making process, urging their leadership to put everything out in the open.
Boehner has been pushing the idea of pro-growth tax reform that doesn’t raise rates. That seems like a non-starter since White House and Senate Democrats have made it clear that they want to raise rates for higher-income earners. And unfortunately, some Republicans in Congress are getting anxious about a deal and are abandoning their pledge to constituents not to raise their taxes.
Raising taxes in this economy is a bad idea. Just two years ago, President Obama supported extending tax rates for another two years because he realized that the economy would struggle even more if tax rates suddenly changes. The economic climate isn’t much better today.
Michael Tanner, a senior fellow at the Cato Institute, recently explained that raising taxes on the rich isn’t going to balance the budget:
During a September interview with David Letterman, President Barack Obama addressed the national debt, telling The Late Show host that Americans shouldn’t worry about it in the short-term. Obama did explain, however, that there were issues that faced the country. He noted that the national debt “is a problem long-term and even medium-term and so we’re going to have to take care of this debt and deficit, but we’ve got to do it in a balanced way.”
Actually, the budget deficits that have been run up on Obama’s watch in the last four years have been a problem. If you’ll recall the debt ceiling fight we had last year and the warnings from credit rating agencies that the United States had to do something about its fiscal obligations — in fact, we’ve downgraded by two credit rating agencies. That spurred Congress to work with Obama on sequestration cuts that are supposed to take place at the beginning of the year. Oddly enough, those cuts are now part of the “fiscal cliff,” a combination of tax hikes and spending cuts that every politician in Washington is trying to avoid at this present moment.
Even though he underestimated the short-term problems with the deficit, which isn’t something that raising taxes with help because it doesn’t promote growth, Obama is right about the long-term issues that pose a very real threat to the economy.
While the fight over the “fiscal cliff” is getting the attention of the media right now, the Treasury Department wants another increase in the debt ceiling and Senate Majority Leader Harry Reid (D-NV) is prepared to give it to them, apparently with no questions asked:
Senate Majority Leader Harry Reid (D-Nev.) said on Wednesday that if the $16.394 trillion current legal limit on the federal government’s debt must be raised in the next few months by another $2.4 trillion, “We’ll raise it.”
That would set the debt limit at $18.794 trillion.
During a Capitol Hill press conference on Wednesday, CNSNews.com asked: “Senator Reid, the Treasury Department said last week that we will hit the debt ceiling again near the end of the year. Are you prepared—will you support—”
“I think the debt ceiling will come after the first of the year,” Reid said. “But please everyone accept this: They tried it before—they, the Republicans.”
“They tried it before – ‘We’re going to shut down the government, and we’re not going to raise the debt ceiling,’” he said. “If they want to go through that again, fine.”
“But we’re not going to be held subject to something that was done as a matter of fact in all previous administrations,” Reid said.
CNSNews.com then asked, “But will you support raising it by another $2.4 trillion?”
“If it has to be raised, we’ll raise it,” he said.
While some conservative bloggers have tried to make a case for libertarians voting for Mitt Romney, they haven’t really been able to connect because they fail to understand where we’re coming from in our perspective on politics and public policy. However, Liz Mair, a libertarian who works as a political consultant and strategist, explains that she is voting for Romney, despite reservations about some of his policies: