A funny thing happened on the way to negotiating a way around the big spending cuts and tax rate increases that will take effect in about 30 hours.
The so-called fiscal cliff, coined by Federal Reserve Chairman Ben Bernanke to describe the terrible confluence of Bush-era tax cuts expiring and across the board cuts in government spending that Democrats and Republicans thought would be too much for either party to withstand, appears all but certain to happen, when Senate Majority Leader Harry Reid (D-Nev.) announced Sunday afternoon that negotiations with his Republican counterpart, Senate Republican Leader Mitch McConnell (R-Ky.), broke down when McConnell added a proposal to curb the cost of Social Security cost-of-living adjustments by using the “chained CPI” formula to negotiations both sides said were moving forward, albeit slowly.
Obama takes on GOP
“At this stage, I don’t have a counteroffer to make. Perhaps as the day wears on I will be able to,” Reid said on the Senate floor, as reported by The Hill. “I think that the Republican leader has shown absolutely good faith. It’s just that we’re apart on some pretty big issues.”
Earlier in the day, appearing for just his second time on NBC’s long-running Sunday news show “Meet the Press,” President Obama said about the progress of the negotiations, “They [Republicans] say that their biggest priority is making sure that we deal with the deficit in a serious way, but the way they’re behaving is that their only priority is making sure that tax breaks for the wealthiest Americans are protected. That seems to be their only overriding, unifying theme.”
President Obama has again reached across the aisle to accommodate Republicans concerns, while Republicans, who lost the White House in November and would have given the House gavel back to Rep. Nancy Pelosi but for redistricting ploys that retained the GOP as the majority party despite losing the popular vote by more than a million votes, are hoping they can use the importance of the hour and the issues before a dysfunctional Congress to leverage more concessions on spending from Democrats, who now understand that time and leverage are really on their side.
A Democratic aide familiar with the talks told The Hill that Reid and McConnell had been making steady progress until McConnell made a counter offer Saturday evening that included the chained CPI, a new standard that defenders of Social Security say will result in big benefit cuts over time. Like the president before him, Mr. Reid had agreed to raise the threshold for extending income tax rates from the $250,000 level President Obama campaigned on.
Reid says no to Party of No
But while Leader Reid was willing to make that concession, reports are that he was disappointed to hear the new element of the Republicans latest offer. “We’re further apart than we were 24 hours ago,” an aide familiar with the negotiations noted.
President Obama, speaking in his accustomed cool, calm and collected manner, showed he wasn’t going to negotiate with himself, as Republicans saw him do time and time again when similar deadlines were fast approaching. Instead, the man America voters picked over Mitt Romney to lead them forward hammered Republicans for again demonstrating, as they have repeatedly before, that they want to protect the wealthiest members of their constituency and not the middle-class.
“I think it’s been very hard for Speaker Boehner and Republican Leader McConnell to accept the fact that taxes on the wealthiest Americans should go up a little bit, as part of an overall deficit reduction package.” The “little bit” President Obama talks about amounts to an increase of 4-cents more levied on every dollar earned above $400,000. In France, where the rich have a rich if not a memorable history of what happens when income disparity becomes too great, new President Francois Hollande wants to increase tax rates on the very rich to 75 percent. In America, the top rate being proposed by Democrats will only inch income tax rates back up to the Clinton-era’s 39.6 percent.
Republicans have said no to previous deals where they would have gotten more, in hindsight, than what President Obama is proposing now. The White House has advised GOP leaders to “take the deal,” but they have shown they’re not willing to abide by the wishes of the majority of American voters who reelected President Obama and agree that the rich should indeed pay more.
“We have been talking to the Republicans ever since the election was over. They have had trouble saying yes to a number of repeated offers,” President Obama said.
Senator Reid even agreed to raise the threshold for extending income tax rates and to extend the estate tax rate at 35 percent with an exemption of inheritances up to $5 million per spouse. But the chained CPI was the straw that broke the camel’s back.
In his laconic style, Sen. Reid said he wouldn’t entertain any Social Security cuts now. “That just doesn’t seem appropriate,” he said, adding, “We’re open to discussion about entitlement reforms but we’re going to have to take it in a different direction. The present status will not work. We are not going to mess with Social Security.”
GOP leads nation off the cliff
Senator McConnell, who’s been relatively quiet of late, choosing instead to let House Speaker John Boehner be the main obstacle to a deal that has come down to the final hours, characterized the president as someone not understanding the urgency of the hour.
House Speaker John Boehner, an Ohio Republican, released a statement in response to President Obama’s interview on Meet the Press. “Americans elected President Obama to lead, not cast blame,” he said. Boehner, who could be challenged for his high post, said the President is the one that “has never been able to get to yes.”
From day one of President Obama’s first term today, Republicans led by Mr. Boehner and Mr. McConnell has shown they will oppose virtually everything the president is for, rightfully earning them the title “party of no.”
“I’m concerned with the lack of urgency here. There’s far too much at stake for political gamesmanship,” Sen. McConnell, a master of political gamesmanship, said.
What to expect on Monday is that Sen. Reid will bring to the floor a default bill that extends the Bush-era income tax rates for family income below $250,000, extends unemployment benefits and expiring business tax provisions and freezes scheduled cuts in Medicare payments to doctors. President Obama said that something everyone wants, and it should be something Congress can and must do now.
Democrats thought Social Security reform was not part of these negotiations, but Sen. McConnell surprised negotiators by inserting the proposal. “We believed it was mutually understood that chained-CPI was off the table for a smaller-scale agreement, and see the Republicans’ continued insistence on including it as a major setback. It is one of the biggest concessions our side could offer, and they know we cannot accept it in a scaled-down deal,” published reports said.
“We’re willing to make difficult concessions as part of a balanced, comprehensive agreement but we’ll not agree to cut Social Security benefits as part of a small or short-term agreement, especially if that agreement gives more handouts to the rich,” Reid said in response to McConnell’s last-minute surprise proposal.
The president has expressed support for including chained CPI in a broader deficit-reduction deal, but he told NBC’s David Gregory this: “One of the proposals we made was something called chain CPI, which sounds real technical but basically makes an adjustment in terms of how inflation is calculated on Social Security.” It is unpopular among Democrats and isn’t supported by AARP, the nation’s largest lobbying organization for seniors.
Brown says deal without CCPI still possible
Ohio’s senior Senator Sherrod Brown, a Democrat who won a second term in November, also weighed in, saying he thinks there is a better than even likelihood that Reid and McConnell will strike a deal before Monday’s deadline. Reports say a deal could be approved with bipartisan support in the Senate without the chained CPI change on Social Security.
As for President Obama, he told Gregory that among his campaign themes was protecting the middle-class, but that adding seniors and the poor now isn’t a wise idea. “I also have an obligation to the American people to make sure that the entire burden of deficit reduction doesn’t fall on seniors who are relying on Medicare. I also have an obligation to make sure that families who rely on Medicaid to take care of a disabled child aren’t carrying this burden entirely.”
A theme he ran on, that American voters supported, is to push for shared sacrifice. “I also have an obligation to middle class families to make sure that they’re not paying higher taxes when millionaires and billionaires are not having to pay higher taxes,” President Obama said.
January 21, Martin Luther King Day, will be Inauguration Day again for President Obama.
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