Fiscal stalemate: A new proposal and more accusations
November 30th, 2012
08:09 AM ET
7 months ago

Fiscal stalemate: A new proposal and more accusations

Washington (CNN) - The White House and Congressional Republicans are squaring off in negotiations to avert the fiscal cliff, with each side accusing the other of blocking a deal.

For the first time we're getting a look at what the White House is offering to break the stalemate. Republicans consider it an overreach. Democrats make clear it's a first offer, to get specific on the numbers.

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Treasury Secretary Timothy Geithner and White House Director of Legislative Affairs Rob Nabors presented the details while making the rounds on Capitol Hill Thursday.

The headlines? The White House is asking for $1.6 trillion dollars in new taxes. This would include the president's campaign pledge to raise tax rates on families who make $250,000 a year and more. It would bring in additional money by closing loopholes, limiting deductions, raising the estate tax rate to 2009 levels and increasing capital gains and dividends taxes.

Republican sources tell CNN the $1.6 trillion figure is higher than any number the White House had previously presented and was so disarming, according to one source, it set the talks back.

Democrats say the GOP is feigning outrage. In September 2011, Obama first proposed raising taxes one and a half trillion dollars - at that time to pay for the so-called Jobs Bill. Republicans dismissed it as a political stunt with no chance of movement.

It would seem the White House is digging in on its position on taxes - or at least making their stance clearer to the Republicans and the public.

Reflecting a new aggressive posture by the Democrats, the proposal laid out by Geithner also called for additional spending, including $50 billion in new stimulus spending next year, a home mortgage refinancing plan, an extension of unemployment insurance and an extension of the payroll tax cut. It includes a permanent mechanism to vote on a debt limit increase, which would avoid the kind of crisis the U.S. faced in the summer of 2011.

In return, according to multiple sources, the Obama administration is offering to find $400 billion in new cuts to Medicare and other entitlement programs, with the specifics to be hammered out next year.

While Republicans called these proposals unbalanced and unreasonable, White House aides made clear the president is ready to take a counter offer.

This all amounts to an elaborate negotiating dance. With time running out until tax rates automatically rise and drastic spending cuts kick in - part of the so-called sequester - both sides are playing for leverage against the clock.

Democrats are emboldened by electoral successes and that the president won a second term while pledging to do what the Republicans are still objecting to: raise tax rates for the wealthiest. Democrats believe the Republicans must and will relent on that point.

To that end, CNN learned in a phone call Wednesday night Obama told Boehner there would be no deal unless the GOP agrees to raise tax rates for the wealthiest. That means recently floated alternatives – including closing loopholes or limiting deductions - would not be enough on their own. Rates must go up as well for the top 2% of income earners.

Republicans tried to turn the conversation away from taxes, insisting the real debate should be about spending cuts.

"Despite claims that the president supports a balanced approach, Democrats have yet to get serious about real spending cuts," Boehner told reporters Thursday.

Reflecting a growing sense of pessimism among Republicans, the speaker added, "no substantive progress has been made in the talks between the White House and the House over the lat two weeks."

In a statement that accused Republicans of blocking a deal to protect "the very wealthiest individuals," White House Deputy Press Secretary Josh Earnest responded to the GOP in an email.

"The President has already signed into law over $1 trillion in spending cuts and we remain willing to do tough things to compromise, and it's time for Republicans in Washington to join the chorus of other voices - from the business community to the middle class Americans across the country - who support a balanced approach that asks more from the wealthiest Americans," Earnest said.


Filed under: Fiscal Cliff • John Boehner • President Obama
soundoff (266 Responses)
  1. rs

    MARK in Texas-

    I think you have to admit that at the very least moving from the GOP's "cut taxes and spend" to "tax and spend" is a step in the right direction.
    Certainly the budget has to get cut (we've ended one war, and about to end another- those cost about $trillion a year!), but we can't allow the hemeraging to continue- the rich need to pay what they did 12 years ago- and better what they paid 40 years ago!

    November 30, 2012 12:37 pm at 12:37 pm |
  2. Fair is Fair

    @ Freedie F. –

    Excellent post and absolutely spot on.

    November 30, 2012 12:38 pm at 12:38 pm |
  3. Parachute Packing Cliff Jumper

    Jump off the cliff now while you can survive the fall America. If Obama continues this fiscal madness, the next cliff will be so high it will kill the economy and country. Sooner or later the country needs to face fiscal reality. The sooner the better. Until it does, the country and everybody in it, are living in a giant government bubble that will burst as they all eventually do. Except this one will take the country down with it. (bankruptcy)

    November 30, 2012 12:41 pm at 12:41 pm |
  4. SCOTT

    RS
    You most likely are part of the 47%, go back to your welfare that I am supporting you on.

    November 30, 2012 12:42 pm at 12:42 pm |
  5. Rudy NYC

    McCain-in-4

    Section. 7 to The Constitution of The United States of America:

    All Bills for raising Revenue shall originate in the House of Representatives; but the Senate may propose or concur with Amendments as on other Bills.
    ------------------------–
    Thanks, I was just about to post that. The same is true for any and all spending legislation: it must originate in the House. The Senate may only propose AMENDMENTS, but may not author any spending or revenue bills.

    November 30, 2012 12:44 pm at 12:44 pm |
  6. Zenger Folkman

    I'd like to see Boehner try to buy a new car. Here he is at the dealership: "So how much is this car?", he asks the salesman. Salesman: "It says right here on the window sticker, $29,507.48." Boehner: "What?? That's outrageous! How is this a fair price? You can keep your car!! You people aren't playing fair!! I'm leaving!! [storms out of the showroom in a huff...] "I showed THEM!", he thinks to himself on the bus ride home. "My buddies the Kochs will be so proud of me!"

    November 30, 2012 12:46 pm at 12:46 pm |
  7. Juan in El Paso

    So the $800 Billion is now $1.6 Trillion in added taxes... Obama added a new Stim-package... and the spending cuts are only $400 Billion out in the future 10 years. Obama can't get all that 1.6 from the rich... Look out middle class – here comes the tax man.

    November 30, 2012 12:47 pm at 12:47 pm |
  8. Thomas

    Boehner Boehner's bus tour , "Team Boehner" ,Donning a red Romney campaign pullover, Boehner said it's possible for the GOP to pretend they didn't loose , it's better to stay in denial and do nothing .

    Boehner must go !

    November 30, 2012 12:55 pm at 12:55 pm |
  9. calamity jane

    @ Larry
    "Why should the burden to finance this country's addiction to spending be borne by the top 2%,"

    The middle class has been funding the 2% addiction for years now. I haven't heard any 2%-er complain about that. Now please stop acting like if your taxes go up, you will be forced to beg for your next meal. You're making me cry.

    November 30, 2012 12:56 pm at 12:56 pm |
  10. massoud

    Tim Gueitners plan is so bad not even Harry Reed and Nancy Pelosi would not vote for it

    November 30, 2012 12:56 pm at 12:56 pm |
  11. Juan in El Paso

    The only real "fair" tax system is a flat tax. Everyone pays!

    I'm 27, single, a CPA (paid for my entire education myself), and I pay more in taxes in one year than my three brothers and two sisters do combined. Why should I be punished, or is personal achievement something that liberals don't support?

    November 30, 2012 12:56 pm at 12:56 pm |
  12. Rudy NYC

    I love the faux outrage from the Republicans. They consider the President's proposal, offensive and whatever. Yet, the House Republicans have sent how many bills to the Senate repealing health care reform and/or financial reform.

    November 30, 2012 12:59 pm at 12:59 pm |
  13. freedom

    If this president really cared about this country, or anyone in it, he wouldn't be planning an extended holiday vacation to Hawaii on taxpayer money – 4 million dollars – while the fiscal crisis is happening. This either means that the fiscal cliff is a facade that is manufactured to manipulate the American people, or the president of the US would rather be enjoying himself at everyone's expense. Either option stinks.

    November 30, 2012 01:00 pm at 1:00 pm |
  14. Not Impressed

    We've tried the republican "vision" and it didn't work and it's now time to work with President Obama, who the people of the United States of America ELECTED because of his "vision." You Republicans need to do ALL the compromising because the people have spoken and YOU LOST!

    November 30, 2012 01:01 pm at 1:01 pm |
  15. Eldon Mickelson

    the best way to pay down what you owe and maintain
    your standard of living, is to increase your income,
    in other words for the government more tax revenue.

    November 30, 2012 01:02 pm at 1:02 pm |
  16. Sound off

    Everyone wants to know the detail of where the money are going and coming. If one is to manage their own personal account, you would not wnat to spend more than you bring in. If you do that, then that is your own fault and should not expect someone to bail you out. Same goes for the goverment. They should show the public in detail where the cuts will be to bring a balance budget with the taxes collected. Both parties will need to bring these information to show us the public.

    November 30, 2012 01:04 pm at 1:04 pm |
  17. WeNeedRain

    The GOP does not agree on cutting tax rates for high income individuals and businesses. The Dems do not agree on cutting any spending. The only agreement appears to be to extend the Bush tax cuts to the middle class.

    So just extend the Bush tax cuts to the middle class! Obama stop conditioning the extension on raising rates for high incomes and GOP stop conditioning the extension on cutting spending. Both parties are holding the common ground hostage for what they want.

    November 30, 2012 01:04 pm at 1:04 pm |
  18. RandyF

    After the super rich like the Kochs and Adelson tried to buy the election with billions of dollar it's impossible to argue they can't afford to pay their fair share of taxes. The US is primarily own by inherited wealth who live like kings and rent their cash to the 99.99% of us who work for a living. That's why the banks were bailout and the Repubs have left the bill for the working class to pay.

    November 30, 2012 01:09 pm at 1:09 pm |
  19. Dan in Ohio

    Just listened to Mr. Boehner: we have had low tax rates for the wealthy for the last 4 years and I don't think we have seen robust job growth because of them. Also I'm interested in what loopholes the GOP is going to close to increase revenues. If it's the mortgage deduction, the education deduction, the dependent deduction and others that I have heard mentioned, the burden falls not on the wealthy, but once again on the middle class (the group that really keeps our country going and growing)!!!

    November 30, 2012 01:12 pm at 1:12 pm |
  20. Alan

    Grab a barrelll fellow Americans, we are all and I mean all, finally going on the E Ride of a lifetime! – Please look at this from a glass half full perspective for a nano second. This from a former Republican who voted for McCain in 2008 even though he felt he threw away his candacy on a twit named Palin, and then Obama in 2012 because the alternative 'Shape Shifter' scared him to death, even though long fed up with both parties, I'm now an Independent.

    The class half full is that in us taking this ride over the Fiscal cliff with those like Boehner and McConnell who will also have to pay the higher taxes because the Bush Tax Cuts ontop of 2 Credit card wars and the 8 yrs waiting for the increase in employment benefits from having Business NOT government handle things HASNT WORKED!. So come Jan 1st, we celebrate!!!!..WHY may you ask. BECAUSE COME NOV 2014 we then vote the Boehner's and McConnells and frankly any politician who is in office now and won't COMPROMISE for the good of the country...OUT OF OFFICE. So come Nov 8th, 2014, really Jan 2015 when the new Congress is seated, FINALLY, after 13 yrs (then since Bush took office) America can move forward...so the good news is America, we can give Congress an ENEMA in less than 2 yr from now, so Please hang in there!

    November 30, 2012 01:14 pm at 1:14 pm |
  21. Reggie from LA

    I don't understand. How can it be raising taxes? The taxes were previously higher. The taxes were cut to a lower rate with an understanding that they would expire. The wealthiest of us enjoyed the lower rates, then the GOP blackmailed any future cooperation with the president unless he contiued the rate. Ok. He extended the rate (much to the chagrin of most of his supporters. he took a bullet for that) and now they want what... to extend indefinitely because rich people say so? BTW. The taxes come from the wealthies wallets. Not their businesses so much.

    November 30, 2012 01:14 pm at 1:14 pm |
  22. ugh

    How can people even stand to listen to Obama? It is a desperate attempt to maintain the absolutely foolish levels of government spending, and it needs to STOP NOW! I really don't care if we go off a fiscal cliff anymore, this foolishness has to stop!

    November 30, 2012 01:16 pm at 1:16 pm |
  23. Will

    We need another new deal. That's right, increase spending, before more bridges collapse and more people have their jobs shipped overseas. Invest in our nation's infrastructure, while putting people back to work rebuilding this country. It would put money in the hands of those most likely to spend it, you know, the ones who drive the entire economy...the middle class, and would provide much needed infrastructure repairs (see New Jersey NOW!). Unless this happens, expect much more of the same. Our current infrastructure received a grade of D. This is not ok in the wealthiest nation on Earth. It worked before, and it will work again. Don't give an inch Barry!

    November 30, 2012 01:18 pm at 1:18 pm |
  24. Canuck

    America's defence spending is going to destroy the country and yet it is rarely mentioned in these discussions... now why is that???

    November 30, 2012 01:18 pm at 1:18 pm |
  25. Ancient Texan

    Thomas- The President won the vote for his office and the Members of the House won their's and are doing exactly what the folks back home elected them to do!

    November 30, 2012 01:18 pm at 1:18 pm |
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