Obama: Pass stripped-down deal

Congress could be back af­ter hol­i­day to re­sume talks.

Austin American-Statesman - - THE SECOND FRONT - Byjackie Calmes and Jonathanweis­man In Busi­ness In­vestors send a re­minder that Wall Street is a power player in ‘fis­cal cliff’ talks.

WASHINGTON — Pres­i­dent Barack Obama, con­ced­ing that a “grand bargain” for deficit re­duc­tion with Speaker John Boehner is un­likely, called Fri­day for Congress to ap­prove a stripped-down mea­sure by year’s end to pre­vent a tax in­crease for all but the high­est earn­ers and to ex­tend aid for 2 mil­lion un­em­ployed Amer­i­cans.

“That’s an achiev­able goal; that can get done in 10 days,” Obama said. “Call me a hope­less op­ti­mist, but I ac­tu­ally think we can get this done.”

The pres­i­dent read his state­ment to re­porters af­ter a brief phone con­ver­sa­tion with Boehner and a sep­a­rate meet­ing at the White House with Sen. Harry Reid, D-Nev., the Se­nate ma­jor­ity leader.

It was Boehner’s de­feat Thurs­day night — when anti-tax House Repub­li­cans blocked a vote on his tax plan, af­ter he had sus­pended ne­go­ti­a­tions with Obama — that forced the pres­i­dent to reach for a fall­back strat­egy with Se­nate help.

By Fri­day, both the House and the Se­nate had closed for the Christ­mas break, and soon af­ter his state­ment Obama left with his fam­ily for their an­nual hol­i­day trip to Hawaii, his na­tive state. His re­turn date is de­pen­dent on events, aides said.

But as he and Democrats in Congress en­vi­sion the coming days, the Se­nate would re­con­vene Thurs­day to pass a com­pro­mise bill with com­mit­ments of co­op­er­a­tion

B7 from both Boehner and Sen. Mitch McCon­nell of Ken­tucky, the Repub­li­can mi­nor­ity leader, to keep the process mov­ing. Fac­ing the Dec. 31 dead­line for the ex­pi­ra­tion of all Bush-era tax cuts, McCon­nell would need to prom­ise not to fil­i­buster and Boehner would have to agree to a House vote on the Se­nate-passed bill.

Obama is propos­ing that the Bush tax rates be ex­tended per­ma­nently for all in­comes less than $250,000 a year. In ne­go­ti­a­tions with Boehner, he had ten­ta­tively agreed to raise that thresh­old to $400,000. Con­gres­sional Democrats on Fri­day said they would go as high as $500,000 if it would seal a deal.

But the Repub­li­cans’ re­jec­tion of Boehner’s bill Thurs­day in­di­cated that such a con­ces­sion by Democrats would not sway anti-tax law­mak­ers. Plan B would have ex­tended the Bush tax cuts for in­comes up to $1 mil­lion, mean­ing a tax hike for an es­ti­mated 0.3 per­cent of house­holds.

While the strat­egy that Obama and Reid are now pur­su­ing re­quires the ac­qui­es­cence of both Repub­li­can lead­ers, McCon­nell has given no in­di­ca­tion whether he would give it.

Boehner has not said whether he would call the House back in ses­sion, but a spokesman said late Fri­day that the speaker would re­turn to Washington from his Ohio home af­ter the hol­i­day “ready to find a so­lu­tion that can pass both houses of Congress.”

As Democrats on Cap- itol Hill de­scribed the pos­si­ble fall­back plan, it would be sim­i­lar to leg­is­la­tion al­ready passed by the Se­nate to ex­tend the Bush-era tax rates for in­come less than $250,000, in­crease to 20 per­cent from 15 per­cent the tax rate for cap­i­tal gains and div­i­dends in­come, and ex­tend some other tax breaks.

But the new bill, they said, would also de­lay the so-called se­quester in Jan­uary — across-the-board spend­ing cuts in mil­i­tary and domestic pro­grams that Obama and Congress sched­uled in mid-2011 as an in­cen­tive for the two sides to ap­prove an alternative, more de­lib­er­ate deficit-re­duc­tion com­pro­mise. And it would ex­tend fed­eral un­em­ploy­ment ben­e­fits for the es­ti­mated 2 mil­lion Amer­i­cans who have been out of a job for long enough to ex­haust their ini­tial state aid.

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