-President Sends Congress A Plan That Repackages Past Proposal
-House Speaker, Senate Minority Leader Say Obama Plan Is Step Backward
-Tsy’s Geithner To Appear On Sunday Talk Shows To Defend Admin’s Plan

By John Shaw

WASHINGTON (MNI) – The fiscal cliff impasse did not appear to come any
closer to resolution this week, in fact the situation seemed grim at times.

In keeping with the deteriorating tone during the week, President Barack
Obama and House Speaker John Boehner repeated their long-held positions in
consecutive appearances Friday afternoon.

Obama called on the House to pass Senate approved legislation to extend
Bush era tax cuts on income of $250,000 or less, stressing the need to help
middle class families.

And Boehner called on the White House to offer a specific package of
spending controls and entitlement reforms.

“This is a stalemate,” Boehner said in a briefing. “Right now we’re almost
nowhere.”

But top budget experts say the fiscal fighting was largely predictable and
they argue next week will be critical in determining if the two parties are
serious about coming to an agreement.

“This week was a setback. There is no way of getting around that,” says
Bill Hoagland, a long-time Republican staff director of the Senate Budget
Committee who is now an analyst with the Bipartisan Policy Committee.

“But next week will be crunch time. There are only about three weeks left
and an agreement needs to start to come together next week. Then you will need a
week to put the package into legislative language and the final week to pass it
in the House and Senate,” Hoagland said.

“There is not much time, but there is time. If the two parties want an
agreement,” he said.

Hoagland said an important signal about where the talks are heading may
occur Sunday when Treasury Secretary Tim Geithner appears on five Sunday TV news
shows, the usual place to stake positions or float ideas.

Hoagland said it will be interesting to see if Geithner doubles down on the
administration’s initial offer or goes out of his way to signal flexibility in
the negotiations.

Geithner traveled to Capitol Hill Thursday to deliver Obama’s opening bid
to avert the fiscal cliff, and his proposal was greeted with derision by
Republican leaders.

The plan was a slight repackaging of the budget the President proposed in
February. This offer, while not surprising to most observers, may have caught
some Republican leaders off balance.

Obama’s offer calls for $1.6 trillion in additional revenues, about double
the sum he and House Speaker John Boehner discussed last year during the
contentious negotiations to raise the federal debt ceiling.

The administration plan is proposing about $400 billion in entitlement
savings, but is also requesting $50 billion for new infrastructure spending.

He also is calling for the extension of Bush era tax cuts for those
families making less than $250,000 a year, the extension of the two percentage
point payroll tax reduction first approved in 2010, a renewal of unemployment
insurance benefits, and a housing refinance provision to help homeowners who are
underwater in their mortgages.

The President also seeks 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 an increase by passing a motion of disapproval,
but this would require two-thirds majorities in both chambers.

Obama’s proposal triggered sternly negative reactions from Boehner and
Senate Minority Leader Mitch McConnell.

“I’ve got tell you, I’m disappointed in where we are and disappointed in
what’s happened over the last several weeks,” Boehner said.

“The American economy is one the line and this a moment for adult
leadership. Campaign style rallies and one-sided leaks in the press are not the
way to get things done here in Washington,” Boehner said.

McConnell said the White House offer was deeply disappointing, calling it
“a step backward, moving away from consensus and significantly closer to the
cliff.”

Democrats countered by charging that the GOP has not offered a specific
deficit reduction plan but has instead fallen back on a vague pledge to consider
additional revenues through tax reform and the closing of unspecified tax
loopholes.

Republican senator Bob Corker told MNI Friday that Obama’s offer was
exclusively for public consumption by his base, adding that serious fiscal talks
continue.

“It was not meant to be taken seriously,” Corker said. “It was just part of
the dance.”

Corker has released a plan to cut the deficit by $4.5 trillion over a
decade, which would cap federal tax deductions at $50,000 per person, implement
the chained CPI for indexing federal benefits, gradually increase the retirement
ages for Social Security and Medicare, and introduce means testing of federal
benefits for those making more than $50,000 a year in retirement.

“We can do what is necessary today with relatively simple legislation,”
Corker said.

But he added that the fiscal cliff stalemate can now be broken by only two
people: Obama and Boehner.

“They are the two main players,” he said.

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

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