Economy & Budget

Fiscal cliff update Dec. 18: A bargain in sight

Fiscal cliff update Dec. 18: A bargain in sight

The countdown remains tight with 14 days to go to the unknown beyond automatic spending cuts and tax hikes scheduled for Jan. 1, 2013. Just when things were beginning to seem hopeless for any deal between President Barack Obama and Speaker of the House John Boehner, it came out this weekend that the speaker had offered to cave on tax increases on the top 2 percent of income earners. Monday, however, Obama and Boehner met for closed press talks, which have seemingly yielded to the potentiality for compromise.

In response to Boehner’s initial weekend proposal, the president, according to the AP, offered Monday to trim the cost-of-living adjustment (COLA) for Social Security beneficiaries; also, he has adjusted his earlier threshold for higher taxes on couples earning $250,000 up to $400,000.

Meetings continue today — Tuesday — between the president and the speaker as recent reports further indicate movement on the part of both the White House and Congress towards a deal.

Some of the important first looks of the day below:

CNBC: Obama, Boehner Press On After Alternative Plan Is Rejected
President Barack Obama and House Speaker John Boehner pressed ahead Tuesday on trying to avert the “fiscal cliff” after the White House rejected a narrow GOP plan on taxes.  The alternative plan, announced by Boehner, proposed extending the Bush tax cuts for those making up to $1 million while the two sides negotiated the other issues. But the White House quickly rejected it, saying it didn’t go far enough and wouldn’t pass the Senate anyway.  Boehner said he still hoped to reach a “balanced” agreement with the administration on the fiscal cliff. But he offered a “Plan B” on taxes in case a broader agreement couldn’t be reached before the end-of-year deadline in two weeks.

Reuters: Wall Street rallies on “fiscal cliff” optimism
U.S. stocks climbed on Tuesday, putting the S&P 500 on track for its best two-day run in a month, as investors gained confidence that “fiscal cliff” talks were progressing, even as significant differences separate Democrats and Republicans in Washington.  The gains followed a rally on Monday that lifted the S&P 500 to its highest point in nearly two months. Investors remain confident that Washington will come to an agreement to avoid a series of spending cuts and tax hikes before the end of the year that could hurt economic growth.  President Barack Obama’s most recent offer makes concessions to the Republicans in taxes and entitlement spending, but House Speaker John Boehner said the offer is “not there yet,” though he remains hopeful about an agreement. Senate Democrats, however, have expressed concern about entitlement cuts, particularly to Social Security.

Christian Science Monitor: Obama makes ‘fiscal cliff’ offer. Are contours of a deal emerging?
With time running out to reach a deal on the “fiscal cliff,” President Obama softened his bargaining stance by moving closer to Republicans on taxes and Social Security. The president’s latest position is that tax hikes on wealthy Americans could begin with households earning $400,000, not the $250,000 that he has long called for. He also signaled willingness to support a new way of measuring inflation when calculating yearly cost-of-living increases in Social Security benefits.  Mr. Obama’s offer, as summarized in news reports Tuesday morning, also includes backing away from a call for the executive branch to have permanent borrowing authority in an era of chronic deficits. Instead, he is now seeking a deal that raises the US debt limit high enough that it would not need to be revisited by Congress until after the 2014 midterm elections.

Human Events: House moves on tax cut in lieu of White House agreement
House Speaker John Boehner announced this morning that the Republican-controlled House will move forward with a plan of their own, in lieu of an agreement with President Barack Obama, to cancel out certain tax hikes taking effect on Jan. 1.  Boehner (R-Ohio) said the House would vote early this week to extend tax breaks for those making less than $1 million a year.  “Plan B is to protect as many American taxpayers as we can,” Boehner said. “It’s not a time to put Americans through more stress.”

Fox News: Boehner to float ‘Plan B’ in case budget talks with Obama fall through
House Speaker John Boehner plans to offer a fall-back option Tuesday morning to avert the looming fiscal crisis, pitching a proposal to rank-and-file Republicans that would prevent a tax hike for most Americans.   The move comes amid accelerating talks with President Obama, but is being positioned as “Plan B” in case those talks fail to yield a compromise before a Jan. 1 deadline — that’s when taxes are set to rise on everyone, followed by a wave of spending cuts.   Boehner is trying to walk a tightrope in negotiations, with the president demanding tax hikes and many Republicans adamantly opposed to them.

WaPo: Boehner’s, Obama’s potential ‘fiscal cliff’ concessions draw fire from left and right
There is no deal yet to avert the year-end “fiscal cliff.”  But that hasn’t stopped the pressure from beginning to build to reject the not-yet-a-deal, as potential concessions offered by House Speaker John A. Boehner (R-Ohio) and President Obama in private weekend talks have begun to emerge, setting off anxiety in activist groups on the left and right. The anger being brought to bear against a nascent budget framework helps illustrate how hard it has been to get a bipartisan deal on deficit reduction in recent years.

AP: Obama makes offer to Boehner on ‘fiscal cliff’
President Barack Obama has agreed to curtail future cost-of-living increases for recipients of Social Security and softened his demand for higher taxes at upper income levels as part of accelerating negotiations with House Speaker John Boehner to avoid a ‘‘fiscal cliff,’’ people familiar with the talks said Monday. Speaking a few hours after Obama and Boehner met at the White House, these people said the president was now seeking a higher tax rate beginning at incomes over $400,000, up from the levels of $200,000 for individuals and $250,000 for couples that were cornerstones of his successful campaign for re-election.

USA Today: Obama’s day: Wrangling over the fiscal cliff
It looks like another day of back-and-forth Tuesday between President Obama and House Speaker John Boehner over the fiscal cliff.  Boehner meets with House Republicans to discuss Obama’s latest offer, amid remaining — but narrowing — differences over tax rates and spending cuts.  Aides to Boehner said the president’s latest offer features $1.3 trillion in tax revenues and $930 billion in spending cuts; the Republicans want a one-to-one ratio.

WSJ: Fiscal Cliff, Like Watergate, Creeps Into Lexicon
According to a recent Wall Street Journal poll, nearly eight in 10 Americans have heard of the fiscal cliff, the drastic tax increases and spending cuts scheduled to take effect in January unless Congress acts and the president agrees. One who has is Olivia Viorst, 11 years old.  The sixth-grade Washingtonian sidled up to her mother one evening recently, filled with curiosity and some nervousness. “What’s the fiscal cliff?” she asked. Her mother, Marla Viorst, replied “Go ask your father.”

WaPo: The fiscal cliff, in graphs and GIFs
Once upon a time, there was a budget surplus.  A big budget surplus, in fact. In July 2000, the Congressional Budget Office estimated that if discretionary spending kept growing at the rate of inflation, the next 10 years would see a combined surplus of about $2.8 trillion. Revenue would stay the course, and spending would actually decline gradually:

USA Today: Poll: Public favors Obama in ‘fiscal cliff’ talks
There is strong agreement that President Obama and Speaker John Boehner, R-Ohio, should compromise party doctrine to solve the “fiscal cliff,” and by a nearly 2-to-1 margin the public approves of Obama’s handling of the ongoing negotiations over Boehner. According to the latest USA TODAY/Gallup Poll, 66% said the two negotiators should compromise “on their principles and beliefs” on taxes and spending to avert the year-end “fiscal cliff” when all of the George W. Bush-era tax rates will expire and $1.2 trillion in spending cuts over a decade will begin, threatening an economic recession in 2013.

Boehner to float ‘Plan B’ in case budget talks with Obama fall through

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