Newly re-elected President Barack Obama appears to be headed toward
another clash over taxes and government spending with the House of
Representatives, where Republicans held on to their majority after the
election and Democrats expanded their majority in the Senate.
In grueling negotiations on the level of government spending, taxes and
how to reduce the national deficit, House Republicans have refused to
consider any tax increases for anyone. Democrats have insisted that if
they agree to cuts in government programs they strongly support,
Republicans need to give in and let taxes increase for the wealthiest
Americans.
With the elections over, President Obama has invited congressional
leaders to the White House to start negotiating a deal to prevent sharp
tax increases and spending cuts - often referred to as the "fiscal
cliff" - and says that he is open to compromise on the stubborn fiscal
issues that have paralyzed Washington. But he also made clear that
Republicans are going to have accept tax increases for top earners or
expect a presidential veto.
"But, I refuse to accept any approach this is not balanced," he said. "I
am not going to ask students and seniors and middle class families to
pay down the entire deficit while people like me making over $250,000
are not asked to pay a dime [10 cents] more in taxes. I am not going to
do that."
Tax burden
For his part, Republican House Speaker John Boehner also said he hopes
productive conversations begin soon with the White house, but again drew
a line at the issue of higher taxes for Americans earning the highest
incomes.
"The Number One issue in the election was about the economy and jobs,"
he said. "Everyone wants to get our economy moving again, everyone wants
to get more Americans back to work again. Raising tax rates will slow
down our ability to create the jobs that everyone says they want."
On the tax issue, analysts point out that the cuts passed under former
President George W. Bush are set to expire at the end of this year
unless the president signs an extension, so the burden is on Republicans
to seek a deal. Ronald Brownstein, editorial director of the National
Journal, says Speaker Boehner does not seem to realize that he can no
longer refuse to cooperate.
"With all due respect, it is not really his choice anymore," he said.
"What is different about this environment is that the Bush tax cuts will
expire and will revert to the rates under [former president Bill]
Clinton for everybody unless President Obama signs an extension, and
after this campaign that would be pretty shocking."
Avoiding "fiscal cliff"
Former
U.S. secretary of agriculture and former Democratic congressman Dan
Glickman says he is optimistic that Congress and the president will take
action over the next 45 days to avoid going over the "fiscal cliff."
"But since we have a reelected president, I am hopeful that they can
work out some sort of a deal," he said. "I suspect that it will be a
short-term deal rather than a long-term deal to get us over this
imminent cliff or crisis, so that we can go into next year with a little
more time to think through these things. But that way, I think the
markets will be fairly calm and there will not be people thinking the
United States cannot get its act together at all."
David Wasserman, an analyst with the Cook Political Report, says the
chances are better for the current Congress to tackle budget challenges
than the newly-elected Congress, which he says is likely to be even more
polarized, and with even fewer members who call themselves moderates.
"I have been warning people that it is going to be harder to get
something big passed when Congress is sworn in in January than it is in
these next 45 days, because we have so many people who do have an
incentive to reach across the aisle who are leaving after January," he
said.
Sequestration threat
Analysts point out that the president and Congress also agreed more than
a year ago on a mechanism known as sequestration - severe across the
board cuts on government programs, including defense spending. They
would automatically take effect in January 2013 unless the
Democratic-controlled Senate and the Republican-controlled House reach
an agreement on taxes and spending.
Neither Democrats nor Republicans wants those dramatic spending cuts, so
that may give them the incentive they need to try to find common ground
with President Obama when they are meeting with him at the White House.
