The Post reports, “President Obama and House Speaker John A. Boehner (R-Ohio) met Sunday afternoon at the White House to continue discussions over how to avert the ‘fiscal cliff,’ their first in-person gathering in nearly a month as the deadline to avert a massive tax hike is fast approaching. Aides to Boehner confirmed the meeting took place, but declined to provide further details.”
The GOP House and Senate leadership offices were equally mum on background. One GOP adviser on the House side put it succinctly: “We have to wait and see if those talks bear fruit.” But where is the deal?
More and more you hear responsible Republicans on the Hill observe that the GOP has little leverage on extension of the Bush tax hikes now, but will have increased leverage when it comes to the debt ceiling increase next year.
Sen. Bob Corker (R-Tenn.) said Sunday, “I do think something is going to happen. I hope it’s large enough for people like me that want to see entitlement reform to vote for. But, you know, the president does have some leverage now. On the other hand, Republicans have leverage with the debt ceiling and the C.R. [continuing resolution] which ends in March.” He explained, “There is a growing group of folks, that are looking at this and realizing that we don’t have a lot of cards as it relates to the tax issue before year end.”
If the House Republicans refuse to do something (which cannot include extending all the Bush tax cuts, a nonstarter with Democrats) then taxes for everyone go up, a huge hit to the economy going forward, and the GOP gets blamed. Not a good idea, and in fact that might be second-worst scenario. The absolute worst would be signing onto the president’s humongous tax hike that not even Senate Democrats could support.
The alternative to these disagreeable choices, however, is far from clear. What the House should not do, however, is give up the leverage of the debt ceiling unless the president agrees to substantial entitlement reform. There is no other means, I strongly suspect, of getting the president to take on his own base and do the sort of fiscal reform he previously has acknowledged is critical. As Kim Strassel paraphrased the GOP’s argument to the president on Fox News Sunday: “The middle class hostage that you have been holding over our heads will be dead and then we will — we think we’ll have more leverage to make you sit down and do cuts.”
Granted, the president ran on class warfare. But he did not run on doing nothing about entitlement reform. This is where the country largely agrees with Republicans that we must do something to modify the drivers of our debt or risk financial collapse. To some extent the Bush tax cuts have become a sideshow, giving the president cover for dodging spending cuts and painting Republicans as the defenders of the rich. The GOP may want to consider passing multiple bills (extend all the rates, extend them only for those under $1 million and the Simpson-Bowles tax plan) and sending them all to the Senate. Then let the Senate Democrats take some heat and make some hard choices.