By all accounts, Obama and congressional leaders made progress on both fronts. During a meeting in the Roosevelt Room that included Treasury Secretary Timothy F. Geithner and White House economic adviser Gene Sperling, Obama acknowledged the need to tackle health-care spending, according to aides in both parties.
And while Boehner argued that the economy would suffer if policymakers failed to maintain the Bush-era tax cuts for households at all income levels, Democrats said he did not insist that his caucus would reject any rise in the top tax rates, as he has in the past.
“The tone was very good,” Geithner said afterward on Bloomberg TV. “They said what you’d hope for them to say at this point, which is that [an agreement] is something we can do, we’re committed to do it, we want to do it as soon as we can, we know the stakes are very high.”
While Obama is out of the country, the leaders said, their staffs will get to work on a framework to replace the year-end fiscal cliff with a less abrupt and less economically-damaging debt-reduction plan. The savings would be generated in two stages. The first would be a down payment composed of immediate tax hikes and spending cuts to replace blunt, across-the-board budget cuts set in motion during the 2011 debt-limit fight. The second would be a mechanism to force an overhaul of the tax code and long-term changes to entitlement programs next year.
“What we’re trying to do is to come up with a framework agreement that sets up a process for locking in long-term savings,” Geithner said. “But you have to do a meaningful amount of things upfront.”
Pelosi told reporters after the meeting that the leaders did not discuss an overall savings target. But, she said, “I think it would be good if we did something in the $4 trillion category” — a figure that could stabilize the debt as a percentage of the economy.
“My hope is that this is going to be the beginning of a fruitful process where we’re able to come to an agreement that will reduce our deficit in a balanced way,” Obama said as the meeting convened. Then he dismissed reporters, before remembering “one other point that I wanted to make”: Boehner’s birthday is Saturday.
But “we’re not going to embarrass him with a cake,” Obama said, “because we didn’t know how many candles were needed.”
Boehner, who is turning 63, playfully poked the president in the arm, and the two laughed and shook hands.
Amy Gardner contributed to this report.