With time running short to work out a deal to avert a year-end fiscal crisis, President Obama called Speaker John A. Boehner to the White House on Thursday evening to try to move talks forward even as pessimism mounted that a broad deal could be struck that bridges the substantial gap between the parties on taxes and entitlements like Medicare.
Mr. Obama and Mr. Boehner met for less than an hour, not an encouraging sign, with Treasury Secretary Timothy F. Geithner joining the talks. Afterward, as they did following a Sunday meeting, White House and Congressional aides issued near-identical statements saying only that “the lines of communication remain open.”
Before the meeting, a senior administration official struck a downbeat note, saying, “we are in the same place — Boehner has not given on revenue and has not identified any cuts that he wants in exchange for rates.”
“They have only moved backwards since the beginning,” the official said of the Republicans.
According to another administration official, the White House hastily set up the meeting Thursday afternoon, hoping to prompt some progress before Mr. Boehner returned home to Ohio for the weekend. Earlier in the day, Mr. Boehner dug in on demands that Mr. Obama lay out more concrete cuts to Medicare and other entitlements as the price for tax increases on the rich.
The speaker’s tone — and the hostile White House response — raised the level of pessimism that a wide-ranging agreement could be reached quickly to head off hundreds of billions of dollars in automatic tax increases and spending cuts beginning next month. Adding to the sense that the two sides might not come together, rank-and-file Republicans said the leadership had not begun laying the groundwork for a major concession on taxes.
But Mr. Boehner pointedly did not rule out a vote before the end of the year on legislation to extend the Bush-era tax cuts for the middle class — and in so doing allow tax cuts on incomes over $250,000 to expire.
“The law of the land today is that everyone’s income taxes are going to go up Jan. 1,” Mr. Boehner said. “I’ve made it clear that I think that’s unacceptable, but until we get this issue resolved, that risk remains.”
Little more than two weeks are left before the nation goes over the so-called fiscal cliff, and neither Mr. Boehner nor Mr. Obama has budged from core demands.
The president continues to insist on an immediate increase in the top two income-tax rates as a condition for further negotiations on spending and entitlement changes. If Mr. Boehner insists on further spending cuts, White House officials say, he must lay out his specific demands, something he has so far declined to do.
Mr. Boehner has offered to raise his opening bid of $800 billion in increased tax revenue over 10 years, but only if the president makes a significant commitment to overhaul entitlements and slow their growth. The White House’s opening bid committed to pressing for changes next year to federal health care programs that would save $400 billion over 10 years. Mr. Boehner wants a far larger pledge and a firm commitment that Mr. Obama will put his political weight behind substantive changes to Medicare and the tax code.
The president, Mr. Boehner said, appears intent on squandering “a golden opportunity to make 2013 the year that we enact fundamental tax reform and entitlement reform to begin to solve our country’s debt problem and, frankly, revenue problem.”
But Jay Carney, the White House press secretary, said the president was “willing to make tough choices on the spending side — to reduce our spending as part of a broad package that includes cuts in discretionary spending, savings from our entitlement programs and increased revenues that are borne by those in this country who can most afford it.”
Even as Mr. Boehner pressed Mr. Obama to specify reductions in spending for Medicare and other entitlement benefit programs, the Republicans continued to be mute on what reductions they favor.
Republicans are not proposing the sort of program overhauls — making Medicare a voucher like system, and turning Medicaid into a lower-cost block grant to the states — that have been part of their House budgets for the past two years, sponsored by Representative Paul D. Ryan, the House Budget Committee chairman and Mitt Romney’s running mate in the presidential race. In any case, the Ryan budgets delayed the changes so they would not save much in the next 10 years. And as many Democrats recall, Republicans attacked Mr. Obama and Congressional Democrats in the campaign for having approved Medicare reductions of $716 billion over a decade as part of the 2010 health care law.
Washington now faces three potential outcomes to the fiscal impasse, lawmakers from both parties say. A broad deal could be reached in which some taxes go up immediately and some cuts are secured to stop the broader tax increases and halt the across-the-board tax cuts — and to lock in targets for entitlement savings and revenue produced by changes in tax policy revenue to be worked out next year.
If no deal is reached, Republicans are increasingly talking about a more hostile outcome in which the House passes legislation that extends tax cuts for the middle class, sets relatively low tax rates on dividends, capital gains and inherited estates, and cancels the across-the-board defense cuts, but leaves in place across-the-board domestic cuts. Then House Republicans would engage in what Mr. Boehner, in a private meeting last week, called “trench warfare,” a running battle with the president on spending, first as the government approaches its statutory borrowing limit early next year, then in late March, when a stopgap government spending bill runs out. But such legislation might not be able to pass the Senate, leaving the country no closer to a resolution.
Finally, many Republicans say it is now possible that the government will plunge into the fiscal unknown. Representative Patrick T. McHenry, Republican of North Carolina, said Mr. Boehner had given Republicans no indication “that he’s going to budge.”
“He’s not going to raise rates in any way, shape or form,” he said. “That has not changed.”
Republicans who have advocated giving in on rate increases now say the party appears to be preparing for the worst. Representative Charles Bass, a New Hampshire Republican who lost his re-election bid last month, said the pain for Republicans would not be immediate because the tax increases would not be apparent to most Americans that fast.
But “by the third or fourth week of January, their life will be so miserable,” he said, “their life will be so unbearable, they’ll just want to get done with it.”
Source: The New York Times