WASHINGTON: Political posturing by the White House and Republicans in Congress hit new heights over the weekend as the Obama administration laid out specifics of its plan for avoiding the looming “fiscal cliff” and the top Republican in Washington said he was “flabbergasted” by what he called a “nonsense” approach to solving the nation's budget crisis.
President Barack Obama and congressional Republicans have until Dec 31 to reach agreement on how to increase government revenue and cut spending to avoid big automatic tax increases on all Americans and massive cuts in government programs ranging from education to the military.
Adding to the negative consequences of a negotiated outcome is the coincidence of the end to two other programs at the same time – a reduction in the payroll tax that Americans pay into the federal Social Security pension program and extended government benefits to the long-term unemployed.
Economists say failure to find an accord could send the US economy back into recession and cause a spike in already stubbornly high unemployment.
Past legislation has set the Dec 31 deadline for the expiration of George W. Bush-era tax cuts and the implementation of steep across-the-board federal spending cuts amounting to hundreds of billions of dollars.
In interviews on five television political talk shows that aired Sunday, Treasury Secretary Tim Geithner said Republicans have to stop using “political math” and say how much they are willing to raise tax rates on the wealthiest two per cent of Americans and then specify the spending cuts they want.
“The ball really is with them now,” Geithner, one of the White House's chief negotiators with congressional Republicans, said.
With just four weeks remaining to reach a deal, however, House Speaker John Boehner countered that Republicans have a plan for providing as much as $800 billion in new government revenue over the next decade and would consider the elimination of tax deductions on high-income earners.
But when pressed on ‘Fox News Sunday' for precise details, the Ohio Republican declined to be specific. There are “a lot of options in terms of how to get there,” Boehner said.
On Thursday, Geithner presented congressional leaders with Obama's post-election blueprint, but Boehner, leader of the Republican-controlled lower chamber of Congress, dismissed the plan as “not serious,” merely a Democratic wish list.
As outlined by administration officials, the plan calls for nearly $1.6 trillion in new tax revenue over the next decade, while making $600 billion in spending cuts, including $350 billion from the Medicare system that provides health care coverage to the elderly and other health programs.
But it also contains $200 billion in new spending on jobless benefits, public works and aid for struggling homeowners – and would make it virtually impossible for Congress to block Obama's ability to raise the debt ceiling.
“I was just flabbergasted,” Boehner said, describing his meeting with Geithner. “I looked at him and I said, 'You can't be serious?'” The speaker, noting the short time between the Nov 6 election and the New Year, said time has been lost so far “with this nonsense.”
But Geithner, in interviews that were taped Friday, offered a somewhat rosier view. “I think we're far apart still, but I think we're moving closer together,” he said.
He called the back-and-forth “normal political theater,” voicing confidence a bargain can be struck in time, and said all that's blocking it is Republican acceptance of higher tax rates on the wealthy.
“It's welcome that they're recognising that revenues are going to have to go up. But they haven't told us anything about how far rates should go up and who should pay higher taxes?” Geithner said, calling Republican proposals “political math, not real math.”
Republican leaders have said they will accept higher tax revenue overall, but only through what they call tax reform – closing loopholes and limiting deductions – and only coupled with tough measures to curb the explosive growth of Medicare, Medicaid and Social Security.
Medicaid is the government health insurance program for the poor. Social Security is the federal pension available to retirees. But Geithner insisted that there's “no path to an agreement (without) Republicans acknowledging that rates have to go up for the wealthiest Americans.”
He also said the administration would only discuss changes to Social Security “in a separate process,” not in talks on the fiscal cliff.
As for government outlays, Geithner said if Republicans don't think Obama's cutting enough spending, they should make a counter-proposal. “They might want to do some different things. But they have to tell us what those things are,” he said.
Republicans have also rejected Obama’s debt ceiling proposal. Geithner noted it was Senate Minority Leader Mitch McConnell who first suggested it, as a temporary measure in the summer 2011 deficit deal.
The administration would make it permanent. “It was a very smart way by a senator with impeccable Republican credentials to lift this periodic threat of default,” Geithner said. “And that’s an essential thing for us.”
Under current laws, Congress must approve raising the government’s ability to borrow. Until last year’s standoff, which resulted in a lowering of the country’s credit rating, the debt ceiling had been raised as a matter of course regardless of which party controlled the White House or Congress.
Geithner voiced sympathy for Republicans leaders, saying they’re caught between the voters’ endorsement of higher taxes on the rich and a House Republican caucus that thinks all tax increases are job-killers.
“They really are in a difficult position,” he said. “And they’re going to have to figure out their politics of what they do next.”
In the past week, Obama has held a series of campaign-style appearances — including one in a swing district in Pennsylvania — urging lawmakers to accept a measure passed by the Democratic-controlled Senate extending the tax cuts enacted during the Bush administration for all but the top two per cent of wage-earners.
He will continue the effort when he meets with state governors on Tuesday and speaks to the Business Roundtable on Wednesday.
House Democratic Leader Nancy Pelosi said Sunday that she will try to force a vote on the Senate-passed bill favoured by Democrats to avert the fiscal cliff. But she was unlikely to line up enough Republicans to succeed.
The Senate bill would extend many of the expiring tax cuts for middle-income families, while letting tax cuts expire for individuals who make more than $200,000 and married couples making more than $250,000.