Fiscal cliff negotiations stall as Republicans refuse to budge on tax rates
WASHINGTON — US Democrats and Republicans bickered on Thursday over whether to raise taxes on the wealthiest Americans, as crunch negotiations on avoiding the so-called fiscal cliff stalled.
Republican speaker John Boehner met Treasury Secretary Timothy Geithner, after a Wednesday phone call with President Barack Obama, but warned there had been “no substantive progress” in averting drastic tax hikes and spending cuts.
“I’ve got to tell you that I’m disappointed in where we are and disappointed in what’s happened over the last couple of weeks,” he said, urging the White House to “get serious” about cutting federal spending, including entitlements.
Senate Majority Leader Harry Reid, shot back that Democrats have seen no “serious offer” from Republicans, who oppose raising tax rates and are divided about a quick agreement on keeping taxes low for middle-income families.
Taxes are to rise on most American households by about $2,200 and automatic spending cuts will kick in on the first day of 2013 if lawmakers do not pass legislation that lowers the ballooning deficit, the White House estimates.
There is broad agreement that Bush-era tax cuts should remain for everyone making less than $250,000 per year but, while Obama’s Democrats want the cuts to expire for the wealthiest two percent, Republicans oppose such tax hikes.
Democrats pushed through legislation in the Senate that would let the top tax rate rise from 35 percent to 39.6 percent while keeping middle-class rates unchanged, and have urged the Republican-controlled House to pass the bill.
Boehner has refused to bring it to the floor, despite some calls from within his party.
Congressman Tom Cole made waves when he broke ranks recently to urge fellow Republicans to extend the middle-class tax cuts and thrash out a deal on top earners next year.
Obama dispatched Geithner to Capitol Hill to meet with congressional leaders but the move failed, at least publicly, to move the ball forward.
“No substantive progress has been made in the talks between the White House and the House over the last two weeks,” Boehner told reporters.
If no deal is reached before year end, a $500-billion poison pill of tax hikes and massive spending cuts, including slashes to the military, comes into effect, with the potential to pitch the US economy back towards recession.
White House spokesman Jay Carney insisted there had been some “progress” towards the idea that a balanced plan to cut the deficit must include extra revenues, but that the income tax rates remained a problem.
He said Republicans “have yet to accept the essential fact that in order to achieve the kinds of revenue that are necessary for a … balanced plan, rates on the top two percent, the wealthiest earners in this country, are going up.
“They have to go up. The president will not sign any legislation that extends the Bush-era tax cuts for the top earners in this country.”
Senate Minority Leader Mitch McConnell, after his own Geithner meeting, said the White House “took a step backward, moving away from consensus and significantly closer to the cliff.”
Republicans, he said, were willing to “move out of our comfort zones” and consider increasing revenues in order to reach a deal, but the White House “continues to fail to show the leadership necessary to get an agreement.”
Boehner and McConnell met with Obama, Reid and House Minority Leader Nancy Pelosi after the president’s November 6 re-election and, while the mood coming out of that meeting was one of confidence, Thursday’s was markedly different.
“Listen, 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,” Boehner said.
Boehner described his meeting with Geithner as “frank and direct,” but said it did not yield any “specific plan for cutting spending.”
“It’s time for the president, and congressional Democrats, to tell the American people what spending cuts they’re really willing to make.”
Reid sounded exasperated when told of Boehner’s comment that the ball was effectively in the White House’s court.
“I don’t understand his brain,” Reid said.
“Democrats are all on the same page,” he added. “For two weeks we have been waiting for a serious offer from Republicans.”
Lawmakers last year agreed to slash spending by $1 trillion over 10 years.
They also sought to identify an additional $1.2 trillion in savings by January 2013, with the provision that automatic spending cuts kick in if they are unable to agree on how to lower the deficit.