-Budget Experts Believe Obama, Boehner Are Inching Toward An Agreement

By John Shaw

WASHINGTON (MNI) – House Speaker John Boehner did not engage in happy talk
Friday as he described where he thinks negotiations stand to avert the fiscal
cliff. But he acknowledged talks among staff are continuing behind the scenes,
and budget experts are more hopeful the White House and House Republicans are
inching closer to a deal.

It would be hard to draw that conclusion from Boehner’s briefing however.
In simple and terse words he blamed President Barack Obama for “another wasted
week” in the fiscal cliff standoff. He argued that Republicans offered a good
faith alternative and have not yet received a counteroffer from the White House
— the identical attack the White House used last week.

“If the president doesn’t agree with our proposal I believe that he’s got
an obligation to families and small businesses to offer a plan of his own, a
plan that could pass both chambers of the Congress,” he said. “We’re ready and
eager to talk to the president about such a plan.”

The Speaker confirmed that he and Obama spoke Wednesday and that their
staffs met Thursday.

“The phone calls was pleasant, but it was just more of the same, like the
conversations that the staff had yesterday, just more of the same,” he said.

For his part, Obama has expressed public words of hopefulness about an
agreement, but has not hinted at what concessions he is willing to make.

“Nobody wants to get this done more than me,” Obama told executives from
the Business Roundtable Wednesday, but he said increasing the marginal tax rates
on the wealthiest taxpayers is an essential part of any agreement.

“We’re not insisting on rates out of spite or partisan bickering,” he said,
but the revenue higher rates generate are essential to a balanced agreement.

Obama said once the GOP accepts this demand for higher marginal rates on
the wealthiest, “We can probably solve this in about a week. It’s not that
tough.”

However, Treasury Secretary Tim Geithner’s statement that the
administration is willing to take the economy over the fiscal cliff – the Jan. 1
expiration of the Bush-era tax cuts and implementation of mandatory,
across-the-board spending cuts – has shaken up Washington.

Boehner slammed the comments as “reckless talk,” but it was clearly the
message that the White House feels its negotiating position is a strong one.

The president will travel to Michigan Monday to talk about fiscal issues,
another out-of-Washington foray which angers Republicans who say the president
should be negotiating with them in the capital, not traveling the nation.

Bob Bixby, the executive director of the Concord Coalition, a budget
watchdog group, said the current political landscape is a complex mix of public
posturing and private probing for an agreement.

“It still think there is a very good chance we get some kind of agreement
by the end of the year. What I worry about is that it’s a smaller, fiscal cliff
deal and not the kind of Grand Bargain we need,” Bixby said.

“My chief concern is that we come up with a mini-deal that seems bigger
than it really is. It could get puffed up with war savings, and interest
savings, and by citing savings from last year’s debt ceiling deal – but still
fail to make important changes to entitlement programs,” he said.

A senior Republican staffer told MNI Thursday evening that the talks are
now between Obama and Boehner, with other congressional leaders effectively
pushed off to the periphery.

“It’s now a two-person negotiation. I guess that’s bad for those who are
excluded -(Senate Minority Leader Mitch) McConnell, (Senate Majority Leader
Harry) Reid and (House Minority Leader Nancy) Pelosi – but it makes it a
simpler, cleaner negotiation. It probably makes it easier to do a deal,” the
staffer said.

He added that some of the basic contours of an agreement are clear such as
increasing marginal tax rate but not to the 39.6% level for the top earners that
Obama wants, but moving it to 37% or 38%. This could be coupled with increasing
the Medicare eligibility age gradually or embracing the chained CPI for indexing
Social Security and other benefit programs.

“If Obama and Boehner want an agreement, it’s out there to be had,” the
staffer said.

Last week, Obama offered a proposal that calls for $1.6 trillion in
additional revenues, $600 billion in entitlement savings and $50 billion for new
infrastructure spending.

The administration plan also calls for the extension of Bush era tax cuts
for salaries up to $250,000 a year, the extension of the two percentage point
payroll tax reduction first approved in 2010, renewal of unemployment insurance
benefits, and a housing refinance provision to help homeowners who are
underwater in their mortgages.

The administration is recommending a revised procedure for the debt ceiling
in which Congress no longer would have to affirmatively approve a debt hike.
Instead, Congress would be able to block debt ceiling increases by passing
motions of disapproval, but these would take two-thirds majorities in both
chambers. Last week,

The House Republicans countered with a plan that calls for $1.4 trillion in
spending cuts and $800 billion in additional revenues through tax reform.

The spending savings include $600 billion from health care entitlements,
$300 billion from other entitlements, $200 billion by using the chained CPI for
indexing benefit programs and $300 billion in additional discretionary savings.

Boehner has said he remains convinced that it is possible to raise $800
billion in revenue by closing loopholes and limiting deductions, adding that the
bulk of these revenues would come from upper income people.

–MNI Washington Bureau; tel: +1 202-371-2121; email: jshaw@mni-news.com

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