November 14, 2012 in Nation/World

Fiscal cliff talk invites extremes

Some suggest purposely missing deadline
Charles Babington Associated Press
 
Benefit increase

The Senate has sent the White House a bill giving nearly 4 million veterans and survivors a 1.7 percent increase in their monthly benefit payments next year. A presidential signature ensures that checks issued beginning in January reflect the adjustment for the higher cost of living. The House approved the measure in July.

WASHINGTON – Some Democrats are pushing an unorthodox idea for coping with the so-called “fiscal cliff”: Let the government go over, temporarily at least, to give their party more bargaining leverage for changes later on.

The idea has plenty of skeptics, and the White House regards it frostily. But it illustrates the wide range of early negotiating positions being staked out by Republicans and Democrats as lawmakers gathered Tuesday for their first postelection talks on how to avoid the looming package of steep tax hikes and program cuts.

Just as brazen, in the eyes of many Democrats, is the GOP leaders’ continued insistence on protecting tax cuts for the rich. President Barack Obama just won re-election, campaigning on a vow to end those breaks.

Democrats and Republicans appear heading toward another round of brinkmanship that will test who blinks first on questions of major importance. It’s a dance that has infuriated many Americans, shaken financial markets and drawn ridicule from foreign commentators.

In late 2010, after big GOP midterm election wins, Obama backed off his pledge to raise taxes on the rich. In the summer of 2011, House Republicans pushed Congress within a hair of refusing to raise the debt ceiling, leading to the first-ever downgrade of the government’s credit rating. And last December, it was the Republicans’ turn to blink, yielding to Obama’s demand to extend a payroll tax break.

The “fiscal cliff” deadline comes in seven weeks. One provision: Unless Congress acts, all Bush-era tax cuts would expire, raising 2013 tax bills for most Americans. Obama wants to end those tax cuts only for households making more than $250,000 a year. Republicans insist on no tax rate increases anywhere.

If the “fiscal cliff” takes effect, congressional Republicans would feel pressure to give ground in several areas to achieve their top goal: restoring tax cuts for as many people as possible. That’s why Sen. Patty Murray, D-Wash., and other Democrats have said their party’s leaders should seriously consider letting the Jan. 1 deadline pass and then negotiate with Republicans under sharply different circumstances. Some or most of any new agreements could be made retroactive to Jan. 1, they say.

If Republicans refuse to let tax cuts expire for the wealthy, Murray told ABC’s “This Week,” “we will reach a point at the end of this year where all the tax cuts expire and we’ll start over next year. And whatever we do will be a tax cut for whatever package we put together. That may be the way to get past this.”

The second part of the cliff package includes across-the-board spending cuts of $109 billion a year, split equally between military and domestic programs and known in Washington-speak as a sequester.

Some budget experts say the spending cuts would phase in gradually. Also, Social Security, Medicare and food stamps are exempt. And agency fiscal chiefs have flexibility to mitigate the effects of the sequester.

© Copyright 2012 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.


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