With only four weeks remaining before the ominously named “fiscal cliff” the White House made its official offer to Speaker John Boehner and Senate Minority Leader Mitch McConnell:
Obama’s proposal, as outlined by Republicans, would purportedly trim the debt by about $4 trillion over the next decade, in part through spending cuts already in force and savings from ending the wars in Iraq and Afghanistan. Also included are $1.6 trillion in taxes and about $400 billion in savings from changes to federal health and entitlement programs.
With regard to taxes, the White House wants about $1 trillion in new revenue from the year-end expiration of the George W. Bush-era tax cuts on income over $250,000. Obama also is demanding that dividends be taxed as normal income and that the estate tax be raised to 45 percent and expanded to cover estates worth as little as $3.5 million — policies for which the Democratic Senate was unable to win approval earlier this year.
The rest of the tax increases and the entitlement savings would come next year, through congressional revisions to the tax code and retirement programs.
The White House proposal would delay automatic cuts at federal agencies for one year while funding other Democratic priorities, including $50 billion for a new infrastructure bank and additional benefits for unemployed workers.
The plan also calls for extending the payroll tax cut, or adopting a similar tax break for working families, in addition to extending income tax cuts for the vast majority of taxpayers.
In other words, in exchange for no spending cuts, no entitlement reforms, $50 billion in new spending, and a tax increase on the “wealthy” the Republicans will get bupkis.
From inside the negotiations the picture looks even more grim:
“Republicans want the president to own the whole offer upfront, on both the entitlement and the revenue side, and that’s not going to happen because the president is not going to negotiate with himself,” the official said. “There’s a standoff, and the staff hasn’t gotten anywhere. Rob Nabors [the White House negotiator], has been saying: ‘This is what we want on revenues on the down payment. What’s you guys’ ask on the entitlement side?’ And they keep looking back at us and saying: ‘We want you to come up with that and pitch us.’ That’s not going to happen.”
This is not a hard nose bargaining position. It is an ultimatum. This is how you do business with someone you don’t like, you don’t respect, and most of all, you don’t fear.
As I’ve argued here | here | here the fiscal cliff is much more a public relations gimmick designed to cause submissive urination within the GOP than representing any long term risk to the economy. In fact, the CBO says the short term recession that may be triggered by going over this alleged cliff will result in long term growth.
Right now we have the best deal we are going to get: real spending cuts against the tax rates going back to the way they were during the Clinton years. The only real issue worth dealing with is indexing the Alternative Minimum Tax for inflation.
For the past two years they have done little to discomfit the ongoing criminal enterprise centered at 1600 Pennsylvania Avenue. More effort has been devoted by the Senate leadership to attacking Jim DeMint than to opposing the Obama regime. The White House has taken the measure of our Congressional leadership and found them wanting. Few worse fates can befall a political party than to be neither feared nor respected. That now is the lot of the GOP in Congress.