President Obama and his Democratic allies on Capitol Hill are driving a hard bargain.
Heading into Friday’s White House meeting with congressional leaders on how to avoid the so-called fiscal cliff, Democrats have mocked House Speaker John Boehner’s offer to raise revenue without raising tax rates and are insisting on increasing rates on the wealthy to meet their demand for $1.6 trillion in new revenue—double the amount on the table during last year’s debt-ceiling debate.
And on Wednesday, Senate Democratic leaders said no to another Republican priority when they rejected putting any entitlement reforms forward ahead of Friday’s meeting. In fact, Senate Majority Leader Harry Reid talked only about what he won’t accept during negotiations—namely, any changes to Social Security.
Asked by National Journal Daily what entitlement reforms Democrats are putting on the table, Democratic Sens. Chuck Schumer and Dick Durbin, both members of Reid’s leadership team, echoed the majority leader. “He’s not bringing entitlements to the table,” Durbin said.
Schumer was less blunt, saying that Democrats are open to making Medicare more efficient, but he refused to talk specifics. “We’re not going to get into negotiations here, but there are lots of things that can be done,” he said.
On the other end of Pennsylvania Ave., President Obama echoed the Senate Democrats’ tough line, insisting on increasing the tax rates of the wealthy, even if it means going over the fiscal cliff—a combination of automatic tax increases and spending cuts that take effect starting on Jan. 2, which economists warn could plunge the country back into recession.
“We can all imagine a scenario where we go off the fiscal cliff,” Obama said in his first news conference since winning reelection last week. “If despite the election, if despite the dangers of going over the fiscal cliff and what that means for our economy, that there’s too much stubbornness in Congress that we can’t even agree on giving middle-class families a tax cut, then middle-class families are all going to end up having a big tax hike.”
Democrats’ tough negotiating tactics are fueled in part by last week’s electoral wins, in which the party expanded its Senate majority while holding the White House. “Our project at the moment is to let them sweat. We know their hand is weak, but we have to figure out how weak,” said a Democratic Senate leadership aide.
Republicans, on the other hand, have taken the opposite tact by offering concessions they hope will position them as the party of reasonable compromise. The day after the elections, Boehner gave a speech indicating that Republicans were willing to increase federal revenue by limiting loopholes and deductions, but would not accept an increase in tax rates. In exchange, Boehner said Republicans expect serious reforms to entitlement programs, mainly Medicare and Medicaid.
In an interview with National Journal Daily on Tuesday, Boehner said he “just always believed that revenues were going to have to be part of the solution, but only if the president is serious about real reform of the entitlement program. You can’t put more revenues on the table unless we do something about controlling our spending, and right now it’s out of control.”
Boehner’s position is essentially unchanged from the one he advocated during last year’s negotiations over raising the debt ceiling.
Much of Democrats’ current positioning is aimed at trying to push the starting point for this year’s talks further to the left than where they ended last year, with some Democrats insisting that last year’s offer has expired. But Republicans aren’t budging, pointing to an election that left government divided.
“There was an election, but the balance of power in Washington has not changed in the slightest,” said Boehner spokesman Michael Steel.
And some Republicans believe that Democrats must be forced to talk about how they’ll cut entitlement spending. Republicans’ uncompromising position on taxes and revenue didn’t look as extreme until Democrats forced a public debate about it. Democrats’ unwillingness to make significant entitlement reforms will look similarly extreme upon public scrutiny, Republicans say.
But so far, Democrats have focused on taking the fight to taxes, an issue that until recently has favored Republicans.
“What I’m not going to do is to extend further a tax cut for folks who don’t need it, which would cost close to $1 trillion,” Obama said. “It’s very difficult to see how you make up that trillion dollars if we’re serious about deficit reduction just by closing loopholes and deductions. The math tends not to work.”
And though Friday’s White House meeting will be much hyped, both sides expect it will be long on process and short on policy. Hill staffers expect the principals will set up a negotiating process—which staffers will talk to whom, for instance—and leave the tough policy questions until after the president returns from his trip to Asia next week.
This article appears in the November 15, 2012, edition of NJ Daily.