Let’s be candid: Everyone has an opinion about the fiscal cliff, but nobody really knows how the high stakes talks will play out before Christmas.
Can long-standing Democratic and Republican rivals carve out a “grand bargain” or a “major down payment” to avoid a year end economic calamity? Will they yet again kick the can down the road to have more time to address the $16.2 trillion national debt? Or, will the talks blow up and unleash a tsunami of automatic tax increases and deep spending cuts?
Absent any serious face-to-face negotiations between the two main principals—President Obama and House Speaker John Boehner, R-Ohio —Washington is being bombarded by a cacophony of voices. Here are the most important things getting said and who’s saying them.
President Obama wants to steal the GOP’s anti-tax identity.
In meetings with entrepreneurs, middle-class voters, and corporate CEOs, the administration stressed it favors immediately passing a bill to continue the Bush-era tax cuts for 98 percent of Americans. House Republicans have refused, hoping to secure the tax cuts for the wealthiest two percent as well.
Obama suggested Wednesday that his opponents are willing to sabotage the economy by subjecting the entire county to a tax increase next year.
“Right now, as we speak, Congress can pass a law that would prevent a tax hike on the first $250,000 of everybody’s income. Everybody’s,” Obama said at the White House. “Even the wealthiest Americans would still get a tax cut on the first $250,000 of their income, so it’s not like folks who make more than 250 aren’t getting a tax break too.”
THE BLEEDING HEART CONSERVATIVE
Speaker Boehner often breaks down in tears during interviews and speeches. His emotions may have gotten the better of him Wednesday, when he claimed to be “optimistic” about a deal.
But besides the cheerleading, his remarks indicated little inclination to compromise with Democrats. "You're not going to grow the economy if you raise tax rates on the top two rates," he told reporters. "We're willing to put revenue on the table, as long as we're not raising rates."
Note: the chain-smoking, Perry Como look-alike is shrewd and susceptible to mood swings – as when he abruptly pulled out of secret talks with Obama about the debt ceiling last year after taking heat from conservatives for contemplating tax hikes.
Tennessee Sen. Bob Corker isn’t sitting at the negotiating table, but the Republican recently unveiled a 242-page, ten-year plan to reduce the deficit by $4.5 trillion, reform entitlement programs and raise $749 billion in fresh revenue. –
The former mayor of Chattanooga has largely operated on the fringes so far, but the conservative is getting plenty of media attention for his admonition that colleagues “pull the Band-Aid off the scab” and approve a comprehensive deficit reduction plan by next month.
“I’m trying to show that it’s easier to go ahead and make the decisions we all know we’re going to have to make at some point – it’s easier to make them now and put this behind us,” Corker told The Fiscal Times. “I understand the negotiations are between the President and Speaker Boehner, and I’ve just tried to show that it’s far simpler to go ahead and make the tough decisions that we need to make right now, instead of kicking the can down the road through a process.”
HIS FOOT OUT THE DOOR
Senate Budget Committee Chairman Kent Conrad has a few weeks left in office—and the Democrat envisions a legacy of deficit reduction. The North Dakota lawmaker supports an elaborate Rube Goldberg-like “budget enforcement mechanism” that would force spending cuts and tax hikes if Congress ultimately lacks the courage to reduce the debt.
He assured The Fiscal Times that his plan would not be a repeat of the $109 billion in automatic cuts set for next year under the budget sequester.
“We need what we call a ‘fail-safe mechanism,’” he said this week. “To me, the way to do this is to have a down payment of revenue and spending, then they have a framework that outlines for the committees of jurisdiction their targets for spending cuts and revenue, and then an enforcement mechanism or failsafe …. But done in a different way than the sequester. . . . I don’t think any serious person could look at the sequester and say that’s good policy.”
THE WALL STREETER
Goldman Sachs CEO Lloyd Blankfein—among a group of top executives—met with Obama on Wednesday and then Republican congressional leaders. Corporate America seems to be treating the fiscal cliff like a hostile merger between two companies: It’s difficult but necessary.
"Both sides need to compromise,” Blankfein said yesterday, according to CNN. “It has to be a balanced approach. This is not a question of one side is right, one side is wrong, good versus evil.”
THE MAIN STREET MOB
Obama sat down Tuesday with a group of entrepreneurs, the kinds of small businessmen who Republicans warn would get pinched by higher tax rates. The group offered two critical observations—they’ve benefitted from some government programs and federal disarray is a big threat to their bottom lines.
Nikhil Arora, who co-founded Back to the Roots, a company that grows mushrooms from recycled coffee grounds, talked about the value produced by Jobs NOW. This program started by Obama’s stimulus provides wage reimbursements for new hires. Of the start-up’s 31 employees, six came through the program, Arora said.
Dave Bolotsky noted that the uncertainty from the debt ceiling crisis last year hurt sales at his company UncommonGoods, which sells creative gifts online and via catalog like a table in the shape of California or a bowl made of bike chains.
“At the meeting,” Bolotsky said, “I mentioned that when they next set a date [for a budget overhaul], sometime other than Jan. 1 would be really wise because consumer spending is two-thirds of our economy and the holiday season is the peak period.”