Reports are that Vice President Joe Biden and Senate Minority Leader Mitch McConnell were close to a deal on a solution to the fiscal cliff on Monday. However, the outcome does not look good for Republicans or Americans as the major roadblock is spending cuts.
So far it seems that Republicans have been the ones to compromise concerning any type of deal. They have given in to class taxation, allowing couples that make over $450,000 a year and individuals making $400,000 to have their taxes raised in the new year.
Low-income households would also benefit from a five-year extension of credits for college tuition and the working poor first enacted as part of Obama’s stimulus package in 2009. And businesses would see a variety of popular tax breaks extended, including a credit for research and development.
The tax on inherited estates would rise from 35 percent to 40 percent, though Democrats agreed to keep in place the current exemption for estates worth up to $5 million. And nearly 30 million households would be protected from paying the costly alternative minimum tax for the first time — either on their 2012 tax returns or at any time in the future. The developing agreement calls for a permanent fix.
The two sides also appeared to have reached consensus on unemployment benefits, with Republicans acceding to Democratic demands to keep benefits flowing to the long-term unemployed for another year. Medicare payments would not be cut for doctors next year, and the cost of preserving those programs would not be offset with other spending cuts.
However, negotiators were still at odds over how to handle the automatic spending cuts, known as the “sequester,” which are set to decimate budgets at the Pentagon and other federal agencies in the New Year. Democrats initially demanded that the cuts be delayed until 2015, but Republicans balked, arguing that the cost of any delay should be covered through additional spending cuts.
And what are Republicans getting in this compromise? It appears that they are getting nothing. Apparently the tax hikes will be permanent, according to Barack Obama.
“I want to make clear that any agreement we have to deal with these automatic spending cuts that are being threatened for next month, those also have to be balanced,” Obama said. “And that means the revenues have to be part of the equation in turning off the sequester and eliminating these automatic spending cuts.”
“Now, if Republicans think that I will finish the job of deficit reduction through spending cuts alone,” he added, “… that will hurt seniors, or hurt students, or hurt middle- class families without asking also equivalent sacrifice from millionaires or companies with a lot of lobbyists, et cetera, if they think that’s going to be the formula for how we solve this thing, then they’ve another think coming. That’s not how it’s going to work. We’ve got to do this in a balanced and responsible way. And if we’re serious about deficit reduction and debt reduction, then it’s going to have to be a matter of shared sacrifice.”
Senator Bob Corker (R-TN) wasn’t going to stand for Obama’s mocking of Congress as he took to the Senate floor following Obama’s statement. “I know the president has fun heckling congress,” he said. “It’s unfortunate that he doesn’t spend as much time working on solving problems as he does with campaigns and pep rallies.”
According to a top aide of Mitch McConnell, Obama changed the terms of negotiations in his speech. josh Holmes, McConnell’s chief of staff wrote, “Potus just moved the goalpost again. Significantly. This is new.”
John McCain also took to the Senate floor declaring that Obama’s speech was “a cheerleading, ridiculing of Republicans exercise. So what did the president of the United States just do?” he asked. “Well, he made a couple of jokes, laughed about how people are going to be here for New Year’s, sent a message of confrontation to the Republicans…. I guess I have to wonder — and I think the American people have to wonder — whether the president really wants this issue resolved, or is it to his short-term political benefit for us to go over the cliff?”
According to McConnell’s office talks were conducted at 12:45am and 6:30am on Monday morning.
While many are saying that a deal is close, it seems that Obama’s desire to simply go over the cliff. It appears to me that the only thing these “talks” are doing is wasting time and they show that the Republicans are willing to give away the store, while Obama is willing to pull the rug from beneath them.
Watch his incredibly bizarre press conference following the “close to a fiscal cliff deal” claim.
UPDATE: NO DEAL. Breitbart reports,
Numerous sources report that the House of Representatives will not be able to vote on any Senate deal to avoid the “fiscal cliff” before the midnight deadline tonight, even if the Senate were able to reach agreement, which it has not yet done. The nation will now go over the “fiscal cliff” of tax hikes and spending cuts.
Republicans and Democrats had appeared close to an agreement earlier today, based on allowing the Bush tax cuts to expire for households earning more than $450,000, and allowing other tax rates to rise. Democrats would not, however, agree to significant spending cuts, and balked at Republican proposals to maintain the amount of the sequester, perhaps while while adjusting its composition to protect defense spending.
Polls suggest that the public will blame Republicans for the failure to avoid the fiscal cliff, though disapproval of the President has been rising sharply. The two sides will now hope to resume negotiations even as tax rates rise for all categories of income, spending cuts take effect for defense and for entitlements, and the federal government hits the debt ceiling approved in 2011, as Treasury Secretary Timothy Geithner warned last week.