Wonkblog is launching a new daily feature that will explain the state of play on the fiscal cliff. This is the first edition.
Details of Obama's opening bid leaked Thursday, and the president drove home its central message at a campaign-like rally in Pennsylvania Frida: He's refusing to budge on top tax rates for the wealthiest Americans, and he's refusing to make significant preemptive concessions to Republicans. Republicans have spent the last 24 hours or so howling in protest.
"It’s not acceptable to me, and I don’t think it’s acceptable to you, for just a handful of Republicans in Congress to hold middle-class tax cuts hostage simply because they don’t want tax rates on upper-income folks to go up,” Obama said outside a toy factory in Hatfield, Pa.
Republicans have responded with a mixture of derision (Mitch McConnell quite literally LOLed) and predictions of doom. "Talks that had been at a standstill may now crumble, thanks to the Geithner-Nabors proposal," said the Wall Street Journal's Kimberley Strassel. "The president is boxing in the Republicans — offering them a deal they cannot accept, a deal they can't even be seen to be treating seriously."
Tevi Troy — a senior fellow at the Hudson Institute and former campaign adviser to Mitt Romney — told me he had to read the president's "non-offer" three times before he believed it. "It was more of a wish list than an offer, and it is not the offer of someone who wants to avert the fiscal cliff," he said. "The offer and the Pennsylvania political trip suggest to me that his goal is to impose political pain on the GOP rather than to come to an agreement."
In other words, the right converging around the idea that Obama isn't serious about coming to a deal to avert the cliff, making it far more likely that we'll go over. Speaker John Boehner was not quite as apocalyptic in his remarks today but still sounded morose about the state of play. “There’s a stalemate, let’s not kid ourselves,” Boehner said. “Right now, we’re almost nowhere.”
"This is (dangerous) brinksmanship, pure and simple," Douglas Holtz-Eakin of the American Action Forum told me, arguing that the president's offer was simply a "warmed-over" version of a budget that got zero votes in the House and Senate and couldn't be taken seriously. “Apparently the president wants us to go over the fiscal cliff," Sen. John Cornyn (R-Tex.) said in a statement. Sen. Chuck Grassley said his bid could be "the straw that broke the camel's back" in the discussions.
But many on the left believe that the president was simply laying down the goal post for the Democratic side of the debate, which they see as just beginning. "The negotiations haven't broken down because they haven't really gotten started yet," says Stan Collender, a former Democratic budget aide. "We're descending below 40,000 feet where everyone could agree ("let's fix this for the American people!"), into the negotiations wherein there are lots of disagreements," says Jared Bernstein, a former White House economic adviser.
They believe that the onus is now on Republicans to make the next move: Sure, Boehner suggested that he'd be open to revenue without rate increases, for instance, but he hasn't shown how he'd do it. "If they have different ideas on how to solve this, they need to start bringing specifics to the table. 'Closing loopholes,' 'broadening the base,' 'cleaning out the tax code' will no longer cut it," Bernstein said.
So far, however, you aren't hearing many Republicans rallying behind an alternative framework, aside from occasional allusion to the Ryan plan. As Dave Weigel notes, Boehner pointed out yesterday that "Republicans have taken action to avert the fiscal cliff. ... We're the only ones with a balanced plan to protect the economy, protect American jobs, and protect the middle class from the fiscal cliff."
That's because the House passed Ryan's budget. But you don't hear many rank-and-file members embracing block-granting Medicaid as a means to solve the fiscal cliff. Instead, there seems to be burgeoning interest from Republicans in doing a different version of entitlement reform and tax reform that goes beyond simply lowering rates. Sen. Bob Corker (R-Tenn.), for instance, has a $4.5 trillion deficit reduction proposal that would include a deduction cap, enrollment age increases for entitlements and other major changes to Medicare.
Corker denies that his proposal is meant to be a rallying cry in the debate. "This is not to inject ourselves into the negotiations," he told the National Review. But the proposal reflects GOP interest in doing something other than Obama's plan — and other than Ryan's. "Republicans will continue to look for a genuinely 'balanced' proposals out of someone who is supposed to be the nation's leader and do due diligence on efficient ways to raise more revenue — including the rich — and develop serious entitlement reforms," Holtz-Eakin said.
So there is some expectation that Republicans could — or should — respond back with an alternative wish list, starting a back and forth that could ultimately lead to a final agreement. But it's unclear whether that will happen.
And that's why some liberals and conservatives are feeling like a cliff-dive has become even more likely. "For the GOP, a deal on Obama’s terms is probably worse than sequestration," wrote the National Review's Jim Gerarghty. "We're more likely to go over the cliff than avoid it," Collender said.
— Why "base-broadening, rate-lowering tax reform" is really "charity-destroying, home-shrinking, state-burdening tax reform."
— Pelosi: We can't afford to talk about stalemates.
— Mitch McConnell's entitlement reform wish list.
— The Daily Caller's Matt Lewis think Republicans shouldn't fool themselves into thinking they have leverage.
— The Chamber of Commerce is fighting to make itself heard in the debate.
— Obama is meeting with the Business Roundtable next week.
— The etymology of the "fiscal cliff."