–President Obama To Meet With Hill Leaders Tuesday At 10:30 AM
–Hill GOP Delays Meeting, Retains No-Compromise Stance
–Admin Says Talks Are ‘Beginning of a Conversation’ on Taxes
–Deficit Panel Chiefs Continues To Explore Compromise

By John Shaw

WASHINGTON (MNI) – President Obama and congressional leaders have
spent the run-up to Tuesday morning’s 10:30 a.m ET meeting in a
bipartisan excercise in tactical maneuvering.

Congressional Republicans, in the aftermath of mid-term electoral
successes, delayed the meeting with Obama for several weeks and continue
to take a no-compromise approach to the extending all of the Bush-era
tax cuts.

House Republican leader John Boehner, who will become Speaker in
January, continues to scorch Democrats on taxes. In a Monday statement,
he said that Democrats “continue to cling to these tax hikes at all
costs, allowing the uncertainty gripping families and small businesses
to continue.”

Meanwhile, the White House, which has angered some congressional
Democrats for signalling too much flexibility on the tax cut issue,
seemed to shift into a different gear Monday.

White House press secretary Robert Gibbs called Tuesday’s meeting
just “the beginning of a conversation” and seemed to indicate the
administration will not rush into a deal with congressional Republicans.

“I do not expect that we’ll come out after an hour or hour and a
half and have full agreement on this,” he said, of the Tuesday morning
meeting.

“I hope there’s agreement on the notion of how important it is to
get this done by the end of the year,” he added.

Senate Majority Leader Harry Reid has said he wants the Senate to
hold “some votes” on alternative tax cut packages in the coming weeks.

Reid has said he would like to schedule Senate votes on the
Democratic plan and the Republican alternative which would extend all
the Bush era tax cuts, including those for higher income people.

Reid said Senate Democrats continue to support extending the
Bush-era tax cuts for those individuals making $200,000 or less and
couples making $250,000 or less.

The congressional Republican plan would cost $4 trillion over a
decade, while the Senate Democratic plan would cost about $3.2 trillion
over the same period. With the nation running annual deficits of more
than $1 trillion, all of this money would be borrowed.

House Democratic leaders, who will retain their majority in the
Lame Duck session, also support extending the middle class portion of
the Bush era tax cuts.

Obama has been signaling since the mid-term elections that he is
willing to back down from his long-held position that the Bush tax cuts
be extended only for those individuals making $200,000 or less and
couples making $250,000 or less.

Some congressional Democrats have suggested extending the so-called
middle class tax cuts permanently, but extending those for upper income
earners for a year or two.

Democratic senator Chuck Schumer has urged setting the tax cut
extension threshold at $1 trillion.

The president and congressional leaders are also expected to
consider for how long to extend a stop-gap spending bill that expires
Friday.

This stop-gap bill is funding most of the federal government while
work continues on the 12 regular spending bills for the 2011 fiscal
year. None of the 12 bills has been passed by Congress.

Congress is expected to pass another stop-gap spending bill by the
end of the week that funds the government. It now seems likely the
stop-gap bill will run until Dec. 17 at which point a longer-term stop
gap spending bill will be ready.

Meanwhile, the National Commission on Fiscal Responsibility and
Reform will try to reach agreement on a deficit reduction plan by
Wednesday, its deadline.

The two chairmen of the panel, former senator Alan Simpson and
former White House chief of staff, Erskine Bowles, are revising a
discussion draft they released several weeks ago. They will brief the
press at 3:30 p.m Tuesday.

President Obama created the commission in February by executive
order. The commission is charged to issue a report by Dec. 1 that would
cut the deficit to about 3% of gross domestic product by fiscal year
2015 and begin slowing the growth of debt over the long term. In order
for the panel to issue recommendations, 14 of the 18 members need to
reach an agreement.

The draft budget plan Simpson and Bowles released earlier calls for
more than $4 trillion in budget savings over a decade.

Their draft plan would bring the federal budget deficit down to
2.2% of gross domestic product by 2015. It would reduce the nation’s
debt to 60% of GDP by 2024 and to 40% of GDP by 2037.

The plan would wring deep savings out of every corner of the
federal budget, including defense and Social Security.

For months, budget experts have said that it is unlikely that the
deficit panel will reach an agreement, but said that some of their ideas
could be incorporated into fiscal plans prepared next year by Obama and
Congress.

** Market News International Washington Bureau: (202) 371-2121 **

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