WASHINGTON—If you enjoy political theater you have two choices for your viewing pleasure: Go see the new movie about President Abraham Lincoln or watch today’s real-life lawmakers try to dance along the edge of the fiscal cliff.
With only a month until a package of tax hikes and spending cuts are set to automatically kick in, Republicans and Democrats seem miles apart on any agreement to avert going over a cliff that many warn will deepen the nation’s economic woes. The federal government actually is facing a triple whammy: in addition to the automatic spending cuts and the expiration of the Bush-era tax rates, the federal government will again hit its debt limit early next year.
Emboldened by their election victories, the message from Democrats, from Capitol Hill to the White House, is to increase taxes now and then talk about cutting government spending later.
The White House made its first proposal Thursday, staking out a far-left position with a plan of tax hikes similar to those that even a Democratic-controlled Senate rejected earlier in this congressional session.
President Barack Obama’s Christmas wish list, delivered to Capitol Hill by Treasury Secretary Timothy Geithner, included asking for $1.6 trillion in new taxes over the next decade combined with $400 billion in entitlement cuts, mostly from Medicare. Going back to 2009 tactics, the Obama administration also offered a stimulus part two package—this one costing roughly $50 billion compared to the first stimulus’ $800 billion-plus price tag.
Deciding to ask for even their dream gifts, the Obama administration also included a proposal to change the rules on how lawmakers handle increases in the nation’s debt ceiling. Instead of having to vote to approve every debt increase, the tweak would give Congress the ability to only block an increase in the debt limit. This would prevent future contentious debates over increasing the federal government’s borrowing limit like the one that occurred in August 2011. But it would also make it easier for Washington to keep spending money it does not have.
If Capitol Hill lawmakers agreed to cede this power of approval, it means that the government would enjoy permanent, unlimited debt ceiling increases. With the executive branch no longer having to trek down Pennsylvania Avenue to Capitol Hill, hat in hand, to ask for more money, lawmakers would have to proactively schedule a vote to stop the automatic spending limit increases. That would not be easy to do in a divided Congress.
Not surprisingly, Republicans were not impressed with the package.
“No substantive progress has been made in the talks between the White House and the House over the last two weeks,” House Speaker John Boehner told reporters Thursday afternoon. “This is not a game. Jobs are on the line. The American economy is on the line, and this is a moment for adult leadership.”
Senate Majority Leader Harry Reid had one response to Speaker Boehner’s rejection of the White House’s initial offer: “I don’t understand his brain.”
Some Republicans have expressed a willingness to consider some tax increases. But they are waiting for Democrats to consider compromising on their own sacred cow: substantive spending cuts.
Instead, Democrats, seeing President Obama’s reelection as a sign that voters agree with their plan, so far are insisting on upfront tax increases three times the size of spending cuts. And those spending cuts, Democrats insist, will occur later, only after being negotiated by next year’s Congress. Republicans have balked at that notion, insisting that Democrats pledge to cut federal spending and entitlements now.
“The real problem in Washington is not too few taxes,” said Rep. Tim Huelskamp, R-Kan. “It is too much spending.”
As leverage, Democrats are demanding that Republicans immediately vote to extend the Bush-era tax rates for households earning less than $250,000 before they expire at the end of the year. Republicans want the tax rates to be extended for all income groups. Democrats want to increase the top tax rate for those who earn more than $250,000 from 35 percent to 39.6 percent.
If Republicans don’t agree to this Democrats would let the tax cuts expire for all Americans and then blame Republicans for not acting to keep the cuts for middle-class America. Obama, who travelled to Pennsylvania on Friday to promote his fiscal plan during a campaign-style visit to a toy factory, is asking Americans to pressure congressional lawmakers to back the partial tax rate extensions.
Senate Republican Leader Mitch McConnell said ignoring specific cuts to Medicare and Social Security delays “the real, balanced solution that this crisis requires.”
Meanwhile, Boehner insisted that any debt limit increase “has to be accomplished by spending reductions that meet or exceed it.”
White House spokesman Jay Carney called “inappropriate” the demand to tie an increase in the debt limit to spending cuts.
“Asking that a political price be paid in order for Congress to do its job to ensure that the United States of America pays its bill and does not default for the first time in history is deeply irresponsible,” Carney said.
The back and forth seems similar to the rhetoric from the summer of 2010 when Democrats and Republicans last clashed on the raising of the debt ceiling. That verbal brawl created the scenario (automatic spending cuts and tax increases) that has now been dubbed the “fiscal cliff.” Lawmakers now have a month to either compromise, go over the cliff, or (more likely) come up with another plan to kick the hard decisions farther down the road.
For many Americas, watching the politicians from President Lincoln’s day eradicate slavery in Steven Spielberg’s latest movie might be more enjoyable than enduring the sight of today’s politicians steering the nation toward the fiscal cliff.