Only 12 days remain for Congress to act to avert a combination of tax hikes and spending cuts scheduled to hit the economy at the start of 2013. In recent days, the pace of negotiations has picked up and entered a new phase of high political drama with fast-moving changes. On Tuesday, House Speaker John Boehner tried to sell his conference on a "Plan B"--a simple vote to let the Bush-era tax cuts expire on everyone but millionaires--in order to gain leverage during his ongoing negotiations with President Obama, which he will still pursue. Even as lawmakers rushed to draft language and put it online by midnight, it remained uncertain whether the rank and file could be persuaded to agree to the first de facto tax hike in years without any immediate spending cuts or tax and entitlement reform. The plan has been rejected by the White House and appears dead on arrival in the Senate.
A vote on the measure is scheduled for Thursday. But many senators are heading out of town at the end of the week to attend a funeral for Sen. Daniel Inouye, who died on Monday, and there seems little chance the fiscal cliff will be resolved before Christmas. Lawmakers will certainly have to return before New Year's Eve to prevent the tax hikes and automatic spending cuts from taking effect, which economists warn could throw the economy into another recession.
National Journal has tracked the meetings, phone calls, offers, and counteroffers that have taken place since Nov. 6, when Obama was reelected to a second term and all eyes in Washington turned to the cliff.
Nov. 7: Obama wins reelection to a second term and Democrats retain their Senate majority, meaning Republicans come to the negotiating table over the fiscal cliff with a weaker hand than they had during the debt-ceiling fights of 2011. Around 1 p.m. the day after the election, Speaker Boehner’s office circulates language to an expanded Republican leadership team that includes House Budget Committee Chairman Paul Ryan, Ways and Means Chairman Dave Camp, and Energy and Commerce Chairman Fred Upton, so they could sign off on the language. Boehner gives his first postelection press conference, where he says, “Because the American people expect us to find common ground, we are willing to accept some additional revenues, via tax reform.” It was a major concession for the Republicans and the first step they took toward meeting Obama halfway to avert the fiscal cliff.
Nov. 16: Obama meets with congressional leaders--including Boehner, House Minority Leader Nancy Pelosi, Senate Majority Leader Harry Reid, and Senate Minority Leader Mitch McConnell--at the White House for a bipartisan meeting and show of unity. Boehner suggests the contours of a deal should include a down payment on the deficit as well as a framework for entitlement and tax reform next year. Both sides pledge to consider concessions on their most important issues in order to reach a deal.
Nov. 19–21: Before the Thanksgiving holiday, staffers from the White House and the House GOP leadership begin meeting to discuss broad principles, but no specific numbers, in advance of any meetings between their bosses. The participants reflect the fact that the most relevant players in this battle will be Obama and Boehner.
Nov. 24: Obama and Boehner have their first one-on-one phone call.
Nov. 27: Members of the Campaign to Fix the Debt, a nonpartisan coalition of business leaders and policymakers, meet with senior advisers at the White House to push for a comprehensive grand bargain to avert the fiscal cliff. The same day, Sen. Dick Durbin of Illinois, a top-ranking Senate Democrat, says during a speech at the liberal Center for American Progress that entitlement reform should be separate from fiscal-cliff discussions.
Nov. 28: Obama meets with middle-class Americans and business leaders at the White House--the former group to help him push for the elimination of the Bush-era tax cuts on the wealthiest Americans, and the latter to repair a tense relationship and enlist support in the fiscal-cliff negotiations. Later that day, he has a phone call with Boehner. On the Hill, former Clinton Chief of Staff Erskine Bowles and other members of the Campaign to Fix the Debt meet with top Republican leaders. Democratic Sen. Patty Murray of Washington urges Republicans to join with Democrats and pass middle-class tax cuts ahead of budget or entitlement reforms, since several members of the GOP have begun suggesting that they are open to letting tax rates rise.
Nov. 29: The White House sends Treasury Secretary Timothy Geithner and Director of Legislative Affairs Rob Nabors to visit the Democratic and Republican leadership on the Hill, where they propose $1.6 trillion in tax increases over 10 years, $50 billion in stimulus spending, $400 billion in savings from Medicare and other entitlement programs to be worked out next year, and the requirement that Congress forfeit the authority over the debt limit. The GOP reaction was swift and critical: “A complete break from reality,” said one Republican congressional aide. Boehner would later call it a “la-la land offer.” Republicans are particularly peeved that Obama was asking for twice as much revenue as he had during the election. In a news conference later that day, Boehner says that “no substantive progress” had been made in the talks.
Nov. 30: Obama takes his message on the road with a visit to the Rodon Group’s plant in the Philadelphia suburbs that manufactures K'Nex and other toys. Just after the president urges Republicans to stop fighting to preserve tax cuts for the wealthiest Americans, Boehner holds a news conference of his own to say, “There’s a stalemate--let’s not kid ourselves.”
Dec. 3: House Republicans send a counteroffer to the White House that includes $800 billion in new tax revenue and $1.4 trillion in savings made up of $600 billion in cuts from health programs, $300 billion savings from other mandatory programs, $200 billion from revising the consumer price index used by the government to set salaries and benefits, and $300 billion in cuts to other discretionary spending. The White House dismisses the offer, saying it “does not meet the test of balance.”
Dec. 4: House Democrats file a discharge petition in an attempt to force the House to vote on a Senate-passed bill to extend tax cuts for everyone but the wealthiest Americans. The earliest it could be considered is on Dec. 24.
Dec. 5: Negotiations are at a standstill. Geithner says on CNBC that the administration is “absolutely” prepared to go over the cliff if an agreement can't be reached. Senate Minority Leader Mitch McConnell unsuccessfully tries to force a vote on the White House’s original proposal. Obama and Boehner speak by phone, but there is no progress.
Dec. 6: Staff talks between the House GOP and the White House are renewed.
Dec. 7: Boehner tells reporters at the Capitol that he has no progress to report and blames the administration for the stalemate.
Dec. 9: In one of the first promising signs in days, Obama and Boehner have a Sunday meeting. Afterward, their staffs release identical statements declining to read out details but promising that “lines of communication” remain open.
Dec. 10: Obama takes his message of higher taxes on the wealthy to Michigan for a campaign-style event. The stalemate continues, with talks ongoing but no new information to share. Republicans argue that the president hasn’t detailed spending cuts to reduce the deficit, but the administration insists it has.
Dec. 11: Negotiations pick up, although the two sides seem no closer to a deal. News outlets report that the White House sent a counteroffer that lowered its demands to $1.4 trillion in new revenue, but Boehner turns it down and sends back another counteroffer of his own that his staff declines to describe. The speaker continues to push the White House for spending cuts. The White House promised corporate tax reform in an attempt to sweeten the deal, but Republicans insist they’ve always said it has to be part of a deal. Boehner and Obama end the day by speaking on the phone.
Dec. 13: As Boehner briefs reporters, he says he remains optimistic but laments “serious differences.” It appears increasingly likely that lawmakers will have to come back after Christmas, as House Majority Leader Eric Cantor pledges that the House will stay in Washington until Christmas Eve and then return before New Year’s Eve. The two sides seem no closer to a deal: Boehner seeks to keep his caucus in the loop with a closed-door meeting in which colleague Rep. Tom Cole, R-Okla., described him as “not a happy camper.” Positions seem to harden, as Durbin says he’s been told that raising the Medicare eligibility age, a key proposal for reducing Medicare spending, is off the table. But at least Obama and Boehner get back in the same room for what is described as a “frank,” 50-minute meeting at the White House. Boehner’s office once again gives no further details. Senate Republicans begin work on their own plan to let tax cuts expire for the wealthiest Americans but block other attempts to raise more revenue, such as limiting deductions.
Dec. 15: Politico reports that in a phone conversation the day before, Boehner made a major concession by offering to let tax rates rise on people earning over $1 million, the first time he has floated the idea of allowing rates to rise. The offer would raise roughly $1 trillion in new revenue, up from a previous offer of $800 billion. He promises a rewrite of tax code next year to limit deductions and asks for $1 trillion in entitlement-program savings, including about $200 billion over next decade by switching to a chained CPI measure for Social Security cost-of-living adjustments.
Dec. 16: The Washington Post reports that Boehner has offered to push any fight for a debt-limit increase off for a year. Boehner’s office pushes back on the report, saying the speaker’s position has always been that an increase in the debt ceiling would require cuts and reforms of a greater size.
Dec. 17: After a morning meeting at the White House between Obama and Boehner that lasted about 45 minutes, the White House sends over a new offer. It raises taxes on households making above $400,000 (up from their previous baseline of $250,000); raises $1.2 trillion in new revenue (down from their previous offers of $1.6 trillion, and then $1.4 trillion); and agrees to use the chained CPI to measure inflation in entitlement benefits, a major Democratic concession. The offer also permanently extends the alternative minimum tax patch (the so-called doc-fix that stabilizes Medicare reimbursement rates) and tax extenders that give businesses breaks for things like research and development and renewable-energy production. Boehner’s office insists that the savings from entitlement programs, non-health programs and discretionary spending is lower than revenue and therefore not balanced.
Dec. 18: Ahead of a morning meeting with the House Republican Conference to sell the idea of raising taxes on millionaires, Boehner says he intends to keep negotiating with Obama but pursue a Plan B. On Thursday, his office planned to offer bill on floor to raise taxes on households earning over $1 million. The White House rejected the plan, saying it will not pass the Senate since Senate Majority Leader Harry Reid was clear he will not take it up. The same day, Nabors was dispatched to the Hill to brief House Democrats on the White House’s latest offer, though many members expressed concern about cuts to Social Security benefits.