Today in ‘fiscal cliff’: This is what progress looks like

December 4, 2012

President Obama says it's "out of balance." The Heritage Foundation says it's "preemptive capitulation." But the reactions on both left and right drive home the fact that House Speaker John Boehner's proposal to stop the "fiscal cliff" marks some progress in the ongoing negotiations, ending the standoff that's been casting gloom over Washington over the last few days.


House Speaker John Boehner (R-Ohio) and President Obama.

"II honestly think, although it doesn't appear that way right now, that
we will see something here that's going to be positive and
significant," said Sen. Rob Portman (R-Ohio) at a Fix the Debt event Tuesday morning. "When you get action from leadership, it's because A, they want to lead and govern and B, it's in their political advantage to do the same thing."

Boehner's proposal still doesn't break the impasse on tax revenue. In an interview with Bloomberg TV on Tuesday, Obama reiterated his demand for a tax hike on the top 2 percent of Americans. Meanwhile, both Senate Majority Leader Harry Reid (D-Nev.) and House Minority Leader Nancy Pelosi (D-Calif.) took steps Tuesday to force a vote later this month on extending the Bush tax cuts for the middle-class, anticipating that they'll be able to peel off some Republicans who are already calling for the party to join Democrats in such a vote. 

But it does solidify the GOP's new, post-election commitment to raising tax revenue for deficit reduction, rather than using it to lower rates, to the disappointment of many on the party's right flank. "This proposal largely dooms future efforts at tax reform based on the sound principle of broadening the tax base to lower the rates," writes Heritage's Alison Acosta Fraser and J.D. Foster, calling Boehner's approach "tax deform" instead of tax reform. Sen. Jim DeMint called Boehner's offer "an $800 billion tax hike will destroy jobs and allow politicians in Washington to spend even more. (Boehner, meanwhile, has already cut down some dissenting conservatives as a show of strength in his caucus.)

As such, it sets up a more concrete target for revenue that the Republicans will be challenged to reach without raising rates—a feat that the White House already says isn't mathematically possible. The $800 billion target also sets up the GOP goal post for revenue opposite of Obama's $1.6 trillion, setting the stage for a compromise that would fall somewhere in between.

On spending and entitlements, it's not entirely clear what Boehner is asking for, aside from a $900 billion target, as simply raising the Medicare age, for instance, wouldn't save nearly enough money. But the few details that Republican aides offered—notably, on background—have already prompted some signs of movement on the Democratic side. Despite earlier calls by Democrat leadership to take Social Security out of the discussions entirely and leave Medicare and Medicaid largely intact, House Democratic Whip House Steny Hoyer (Md.) told reporters Tuesday morning that Boehner's proposals to limit the growth of Social Security benefits, raise Medicare premiums for the wealthy, and raise the Medicare eligibility age are a part of the negotiations.

"They clearly are on the table," Hoyer said, per the Hill's write-up. "They were on the table in the Boehner-Obama talks. They've been on the table for some period of time. That does not mean that I'd be prepared to adopt them now, but they're clearly, I think, on the table."

Cliff Notes

Pew poll: The public is pessimistic about a deal and they're more inclined to blame Republicans if there's no agreement.

 —Sam Stein talks to officials who agree—on background—that Boehner's proposal is a step forward.

—What bankers think about the fiscal cliff.

—Sen. Portman's presentation at the "Fix the Debt" event today was interrupted by liberal hecklers from Ohio. 

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Dylan Matthews | December 4, 2012