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Fiscal Cliff Wrangling Already Falls Short in the ‘Compromise’ Department

Tax hikes on the rich, declares Reid, is "the only bill with a chance of being signed into law by President Obama."

by
Bridget Johnson

Bio

November 26, 2012 - 4:32 pm

Before legislators left Washington for Thanksgiving, congressional leaders gathered ’round the table with President Obama as an opening gesture for fiscal cliff negotiations.

Today, the civility and understanding that leaders claimed to share after emerging from that sit-down vaporized as Senate Majority Leader Harry Reid (D-Nev.) declared on the floor of the upper chamber that there’s only one tax-cut extension that will make it past Obama’s desk: his.

Fiscal cliff negotiations — dealing not just with the expiring Bush-era tax cuts but the looming sequestration cuts — begin in earnest this week, and lawmakers stuffed on turkey appear ready and willing to play a game of chicken.

Ironically, Reid’s speech today began by waxing about the beauty of compromise.

“We could solve the greatest economic emergency facing the nation today — if only the House would consider the Senate-passed bill freezing tax rates for 98 percent of American families and 97 percent of small businesses,” Reid said. “As Thomas Jefferson said, we should not put off for tomorrow what we can do today.”

Republicans have rebuffed Obama’s pre-election pleas to pass the middle-class tax cut extensions now and come back to the upper-class cuts later — which, in congressional-speak, would mean indefinite shelving, especially in Reid’s chamber.

“Our legislation would give economic certainty to the middle class, protect important tax deductions for families and businesses and restore balance by asking the most fortunate among us to pay a little extra to reduce the deficit,” the majority leader continued. “It’s also the only bill with a chance of being signed into law by President Obama.”

“The Senate has spoken. …I only hope House Republicans have been listening.”

House Majority Leader Eric Cantor (R-Va.) said the lame-duck session needs to be about more than whose taxes get hiked. “We’re coming to the table having put very specific ideas into the debate about how you fix the spending problem. That we have to do. Because I don’t care if you raised taxes 100 percent on the wealthy, you’re not gonna fix the deficit problem,” he said on MSNBC today.

“We’ve got to have the president step up, and say, ‘Here’s my position on how to reform the entitlements and start managing down this debt and deficit.’”

Democrats are fixated on raising taxes on the upper-income brackets; others have expressed willingness to plunge off the fiscal cliff if the third rail of entitlements is touched. Republicans are averse to another can-kicking quick fix and are suggesting raising the marginal rate, cutting deductions, or closing loopholes as revenue-generating alternatives to raising anyone’s taxes.

And like it’s campaign season again, Dems are concurrently pushing the narrative that Republicans who want all tax hikes extended are against extending them for the middle class.

All told, expect the wrangling over the fiscal cliff to last at least as long as the Salvation Army bell-ringers.

Anyone in Washington for ObamaCare negotiations knows how the Senate vote in 2009 went to Christmas Eve, with a session beginning at 6 a.m. And that was for a pet project of the president’s, not for a deadline facing Congress that could plunge the country into another recession if not met.

House Minority Leader Nancy Pelosi (D-Calif.) suggested a Christmas deadline for having an agreement on the early January cliff, which is in keeping with Congress’ tradition of arriving at 11th-hour patchy solutions.

The White House even tried using Cyber Monday as a hook for its new Council of Economic Advisers report about the middle-class tax cuts’ impact on consumer spending and retailers. It estimated growth of real consumer spending could be cut by 1.7 percentage points in 2013 if middle-class tax rates go up an average of $2,200 on a family of four, which would translate to consumers spending nearly $200 billion less than they otherwise would have.

Chairman Alan Krueger joined press secretary Jay Carney at the daily briefing to elaborate on the politi-report.

“I think evidence like this is one reason why retailers are so concerned that Congress has not yet extended the middle-class tax cuts,” Krueger said. “The Senate passed an extension of the tax cuts, and it seems to me the thing that we can all agree on, that middle-class families should see an extension of these tax cuts, and that would help the economy in the coming year.”

“I would say, also, that the president has made clear that he will not sign a bill that extends the Bush-era tax cuts for those making more than $250,000. He’s made that clear. I’ve made that clear. Others have made it clear, and that is a firm position,” Carney said. “…But the president has made clear, also, that he understands that compromise has to be part of this.”

Yet even prominent members of the president’s own party have encouraged some give-and-take on the issue.

Sen.-elect Tim Kaine (D-Va.), who won’t have to answer to Reid until the 113th Congress begins in January, is one of those saying the cutoff point for tax hikes should be $500,000, double the level sought by Obama.

“There isn’t anything sort of theological about the $500,000 number. It’s just a compromise,” Kaine said Friday on PBS. “The Democrats’ position has been tax cuts to expire over $250,000. The Republicans’ position has been make all the tax cuts permanent.”

“If that compromise were accepted, it would raise $500 billion in revenue over the next 10 years, which would take the potential trillion-dollar sequester and cut it in half,” he added.

Most Democrats were eager to push the party line, though: Compromise, in fiscal-cliff-speak, means no agreement without tax hikes on incomes above $250,000.

Some just tried to push the hardline message in a nicer-sounding way.

“It’s important to understand that the president has proposed that everybody get continued tax relief, existing tax rates on the first $250,000 of family income,” Rep. Chris Van Hollen (D-Md.), ranking member on the House Budget Committee, said today on MSNBC. “So he says let’s extend that for everybody right now, but he believes we should ask higher income individuals to pay a little bit more.”

Even while pledging to put revenue on the table, though, Republicans weren’t buying the Dems’ version of compromise on the tax hikes.

“Remember two years ago, when the Democrats controlled all? What did the president say? President Obama, who had Nancy Pelosi as speaker then, and Reid, said don’t raise the rates in a down economy, it hurts it,” Minority Whip Kevin McCarthy (R-Calif.) said today on CNN, reminding viewers of the last extension of the Bush tax cuts.

“I think what we can do in three weeks is set up where we reform some of the government spending, we bring more revenue in. That’s what Republicans are putting on the table, because the president asked for it,” he said. “If the president would now say that he wanted, what, 2-1/2 cuts for every $1, show where those cuts are. And then set a framework so you have overall tax reform next year, where you — the committees can work on it.”

Sen. Jeff Sessions (R-Ala.) questioned whether even giving in on additional revenue would make a difference in the country’s greater fiscal crisis — and insisted that any extra revenue negotiated be used to reduce the deficit.

“What I’m concerned about is where this money would be going. They say it’s for deficit reduction, but the president’s budget that he submitted to us in January would increase spending another $1.4 trillion, whereas he’s proposing now, I think, $1.6 trillion in new taxes,” Sessions said today on Fox.

“I have objected to this idea that we’re going to have some secret negotiations going on right now, which I, and 90-plus percent of our members of Congress are not a part of, and it’s going to be plopped down right before Christmas Day? And we’re going to be demanded to vote for it?”

Bridget Johnson is a career journalist whose news articles and opinion columns have run in dozens of news outlets across the globe. Bridget first came to Washington to be online editor at The Hill, where she wrote The World from The Hill column on foreign policy. Previously she was an opinion writer and editorial board member at the Rocky Mountain News and nation/world news columnist at the Los Angeles Daily News. She has contributed to USA Today, The Wall Street Journal, National Review Online, Politico and more, and has myriad television and radio credits as a commentator. Bridget is Washington Editor for PJ Media.
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