House Speaker John Boehner laid down a major condition Friday in his talks with President Obama about the fiscal cliff: Make me an offer that can pass both chambers of Congress.
But with congressional Republicans pledging to block any increase in tax rates, that — in theory — requires the president to surrender his calendar-driven advantage on revenues. The low tax rates introduced in 2001 and 2003 automatically expire as part of the possibly devastating fiscal cliff. Obama seeks to preserve the low rates for 98 percent of the country, while Republicans prefer to increase revenues through reforms that would limit deductions for the wealthy.
Neither side has blinked … yet.
“He insists on his position, insists on my way or the highway,” Boehner said at a Friday news conference. “That’s not the way to get to an agreement that I think is important for the American people and very important for the economy.”
Things should be looking pessimistic because solid evidence of the grounds of a deal have yet to become public. For all the rhetoric about politically viable proposals, neither side deems the other’s offer as sensible.
Every moment closer to New Year’s Day without a bargain pulls the tax rate expiration — and a punishing $200 billion revenue hike — closer to reality and tests the resolve of Republicans to hold out on taxes. So without substantive progress after the GOP counteroffer provided this week, Obama and Boehner went for the next best thing by clearing the room, showing their seriousness by turning the talks into a mano-a-mano showdown akin to the finale in action movie.
Senate Majority Leader Harry Reid, D-Nev., Senate Minority Leader Mitch McConnell, R-Ky., and House Minority Leader Nancy Pelosi, D-Calif., have reportedly lost their seats at the table. That changes the dynamic only in terms of who is speaking for their constituencies, not the question of who relents and how.
Obama supports getting $1.6 trillion over the next ten years from rate increases and capping deductions on the wealthy, with the higher rates starting at incomes above $250,000. Boehner, with the backing of his caucus leadership, proposed $800 billion in revenues from closing loopholes. Their mutual goal is trimming $4 trillion from projected budget deficits during that period.
Just as Boehner is calling on Obama to bridge the bipartisan divide, the White House is looking for Republicans to prove how deductions can be closed to produce the promised revenue without hurting the middle class.
Boehner wants the president to amend his opening bid, while Obama — confident that the numbers are more myth than fact — wants Boehner to walk the public through the arithmetic of his offer.
“The math doesn't work,” White House press secretary Jay Carney said Thursday. “In some cases, the math doesn't work and the middle class gets hammered, or the math works on paper but there’s no way that Congress is going to, for example, eliminate the charitable deduction for the top 1 percent because that would have a terrible impact on churches and universities and institutions that depend on charity.”