Law­mak­ers refuse to budge from ‘fis­cal cliff’

The Washington Times Weekly - - Politics - BY STEPHEN DI­NAN

Republicans and Democrats re­turned to Capi­tol Hill on Nov. 13 pledg­ing to try to reach com­mon ground — but as each side re­in­forced its pre-elec­tion bat­tle lines, the Nov. 6 re­sults ap­pear to have shifted lit­tle other than the rhetoric.

Ma­jor­ity Leader Harry Reid, Ne­vada Demo­crat, opened the Se­nate’s lame-duck ses­sion plead­ing for the chance to res­cue the 112th Congress from be­ing the most lethar­gic on record.

He said the loom­ing “fis­cal cliff” de­pends on bet­ter co­op­er­a­tion. In his open­ing bid, he told Republicans in the House to quickly pass tax leg­is­la­tion that would mean a rate in­crease for the wealthy, but keep rates low for ev­ery­one else.

But Republicans have re­jected that plan re­peat­edly, and Se­nate Mi­nor­ity Leader Mitch McCon­nell, Ken­tucky Repub­li­can, in­stead said it was up to Pres­i­dent Obama to make over­tures to Republicans now that he has se­cured elec­tion to a sec­ond term.

“It’s the pres­i­dent’s move,” Mr. McCon­nell said flatly.

The White House, though, was in no mood to break from its pre-elec­tion pos­ture. Press sec­re­tary Jay Car­ney said Mr. Obama still will veto any bill that doesn’t in­clude a tax-rate in­crease on the wealth­i­est 2 per­cent of Amer­i­cans, and shot down other pro­pos­als, such as cut­ting out loop­holes but not rais­ing the rates them­selves, as “hy­po­thet­i­cals.”

“What I can tell you is that the pres­i­dent will not sign a bill that ex­tends tax cuts for the top 2 per­cent with an ex­ten­sion of the Bush-era tax cuts,” Mr. Car­ney said

Congress had been in re­cess for most of the past two months, and law­mak­ers watched with be­muse­ment as their col­leagues dug in again.

“Peo­ple are stuck in sus­pended an­i­ma­tion,” said Sen. Ben Nel­son, a Ne­braska Demo­crat who is re­tir­ing at the end of this year. “My hope is that as ev­ery­body ad­justs to the out­come of the elec­tion and looks to their po­si­tions that maybe then ac­tion will oc­cur. But if it doesn’t, then this coun­try is stuck in neu­tral. But the prob­lem with be­ing stuck is neu­tral is that it is ac­tu­ally re­verse.”

Mr. Nel­son said he doesn’t want to talk about rais­ing more tax rev­enues un­til he has seen more spend­ing cuts put on the ta­ble.

Republicans say they are will­ing to break with their past stance and al­low the gov­ern­ment to col­lect more rev­enue — though for now, they don’t ap­pear to be talk­ing about new di­rect money from higher taxes.

In­stead, they pro­pose a stream­lined tax code, with lower rates and fewer de­duc­tions, which they say will ex­pand the econ­omy. With a bet­ter econ­omy, they say, the gov­ern­ment can take in more money.

How­ever, bud­get an­a­lysts have said the hole is so deep that the gov­ern­ment can­not grow its way out of the prob­lem, and will need ei­ther deep spend­ing cuts, sig­nif­i­cant tax in­creases or a com­bi­na­tion of the two in or­der to bring the deficit to man­age­able lev­els.

All sides have drawn some lines.

Mr. Obama and Democrats have said they need to see tax rates rise, while Republicans have said en­ti­tle­ment pro­grams must face spend­ing cuts.

The so-called fis­cal cliff hits early next year. The Bush-era tax cuts ex­pire Jan. 1, and $110 bil­lion in au­to­matic spend­ing cuts take ef­fect Jan. 2 as a re­sult of last year’s debt deal. The tax in­creases would ap­ply across the board, while the spend­ing cuts would be di­vided equally be­tween de­fense and do­mes­tic ap­pro­pri­a­tions.

To­gether, they would plunge the econ­omy into a short but sharp re­ces­sion — though the tax in­creases and spend­ing cuts also would re­duce the bud­get deficit dra­mat­i­cally in 2013, and would pro­duce a stronger econ­omy by the end of the decade, ac­cord­ing to the Con­gres­sional Bud­get Of­fice.

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