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Obama, Boehner Not Far Apart on Fiscal-Cliff Numbers Obama, Boehner Not Far Apart on Fiscal-Cliff Numbers

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Congress

Obama, Boehner Not Far Apart on Fiscal-Cliff Numbers

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Speaker of the House John Boehner does the ceremonial swearing in for the 112th Congress at the Rayburn Room of the Capitol on Wednesday, January 5, 2011.(Chet Susslin)

If you stop listening to the political noise on Capitol Hill, you’ll realize the dirty secret about the current state of play of the fiscal-cliff negotiations: The Democrats and Republicans aren’t very far apart in their proposals to one another.

Let’s take taxes first. Remember taxes? Those seemingly unsexy marginal rates that consumed so much oxygen during the presidential campaign, as the candidates talked endlessly about the way taxes on families and investments could help or hurt the economy, small businesses, senior citizens, consumer spending, and the deficit. Remember all those speeches?

 

Well, right now, Republicans and Democrats are only $200 billion apart in the way they view Americans’ future tax bills based on the most recent offers the president and speaker have given one another—and that’s $200 billion over 10 years, mind you. This boils down to a difference of $20 billion per year--a disagreement that seems so minor that it could be solved by any number of wacky budget gimmicks used by Congress in years past. Spectrum sales, anyone?

President Obama’s latest offer, delivered to House Speaker John Boehner on Monday, called for $1.2 trillion in revenue, a drop from the White House’s previous calls for $1.6 trillion. Over the weekend, Boehner offered $1 trillion in revenue (up from an original offer of $800 billion). This included a tax increase on household income above $1 million a year, which was seen as a huge breakthrough for the party of no-new-taxes.

On the topline figure, the two parties are closer than they’ve been in weeks, so close that it seemed for a moment last evening like a compromise was possible.

 

It’s not just the topline revenue figure that holds promise. The two sides also both support a fast-track, comprehensive process to overhaul the individual and corporate tax codes: a long-sought goal of powerful lobbying groups such as the Business Roundtable and others in the business community. Any revenue that doesn’t come from tax increases will come from closing loopholes and limiting deductions, according to both sides’ proposals. Republican candidate Mitt Romney proposed a version of this idea in the final weeks of his campaign by capping deductions for American taxpayers at a dollar amount somewhere between $17,000 and $50,000. Obama has long supported limiting deductions for upper-income people to 28 percent. Broadly, it’s a place that both parties plan to look to for additional revenue to help pay down the deficit.

On automatic cuts to defense and domestic programs known as the sequester, the president and speaker agree, too. Nobody likes it. Nobody wants the across-the-board spending cuts to happen on Jan. 2.

As for spending reductions, the president and the speaker are also only $200 billion apart in their topline proposals. The president wants $1.2 trillion in spending cuts: a dollar-for-dollar match with the amount of revenue he has proposed raising. About $400 billion of that would come from cuts to health care programs, most likely Medicare, according to a source close to the White House and familiar with the talks. Other cuts like $200 billion would come from non-health mandatory spending, with another $200 billion in cuts to discretionary spending, half of which would come from the military.

The White House’s biggest concession to Republicans is its willingness to slow the cost-of-living increases for Social Security beneficiaries, known as chained CPI--a move that Republicans have sought for years. House Democrats on Tuesday met with White House Director of Legislative Affairs Rob Nabors, who outlined the administration’s latest offer. Leaving the meeting, many members expressed concern about any potential cuts to Social Security benefits—although none went to as far to say they would vote against a deal.

 

The speaker’s spending target, again, is only $200 billion away from the president. Over the weekend, the speaker sought $1 trillion in savings with the bulk of it coming from entitlement programs and the way the federal government calculated inflation as part of its government benefits. The speaker’s fallback legislation to raise rates only on millionaires, however, would not include any spending cuts. The bill, nicknamed Plan B, could to come to the floor as early Thursday, according to several Republican House members and a Republican aide.

Even the debt ceiling no longer remains the political football of one week ago. Obama wants to extend it for two years as part of the package; Boehner, one year. Neither seems to want to return to this ongoing, roiling set of fiscal battles, come February or March once the federal government hits it borrowing limit.

Despite these areas of agreement, the deal's politics took on a heightened, frenzied tone on Tuesday at the Capitol. The speaker unveiled the Plan B alternative to the White House’s latest offer, yet also vowed to keep negotiating with Obama. The speaker’s message to his caucus was that he was trying to prevent as many tax hikes as he could. “The White House just can't seem to bring itself to agree to a ‘balanced’ approach, and time is running short. Taxes are going up on everyone on January 1. They're baked into current law. And we have to stop whatever tax rate increases we can,” he told his members.

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The Democrats, too, ramped up the political posturing. White House press secretary Jay Carney issued a statement that seemed to express concern about the fate of a deal. Carney wrote that that the speaker’s Plan B did not protect the middle class, or “address our fiscal challenges with zero spending cuts.”

Meanwhile, Nabors prowled the hallways of the Capital, after presenting the latest offer to House Democrats. House Democrats decried the Republicans’ Plan B idea (better to call out your opponent than comment on your own party’s cuts to entitlements). They expressed their strong dislike of chained CPI and tried to draw a line in the sand on increasing the Medicare eligibility age. “The age limit is much more sensitive,” said House Democratic Whip Steny Hoyer, D-Md. Hoyer also said he would urge his fellow House Democrats to vote against the Republicans’ Plan B legislation if and when it comes to the floor, calling it more of a political ploy than an evolution in the fiscal cliff negotiations.

This made for excellent political theater, all before lunch was even served. It didn’t bode well for the politics of deal-making or the ability of the president and speaker to win broader support in Congress for their proposals. Nor did it doom a deal. Still, if lawmakers looked at the numbers rather than listened to the rhetoric, they’d see how close they truly are to a compromise.

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