Talks between the White House and congressional Republican leaders over the pending fiscal crisis have hit the buffers, with no sign of compromise on either side and with just 29 days to go before the advent of automatic spending cuts and tax increases that economists say could propel the US into another recession.
The negotiations over avoiding the fiscal cliff, in which in the absence of agreement a $607bn package of spending cuts and tax rises would take effect on 1 January, now look certain to enter a nail-biting game of call-my-bluff. With so much riding on the outcome, the two main parties appear to have hardened their positions, guaranteeing a period of stalemate.
Lindsey Graham, the Republican senator of South Carolina, has put it most bluntly: "I think we're going over the cliff," he told CBS.
The most striking aspect of the current standoff is the unbending stance that President Obama is adopting over the talks in stark contrast to his much more flexible approach during his first term in office. White House aides have been briefing that he will not again allow the fiasco of last year's clash over the US borrowing ceiling in which Obama attempted to find a compromise with the Republican leadership only to have his fingers burned.
The White House is clearly entering the fiscal cliff talks with the bullish attitude that Obama's victory in the presidential election last month, albeit narrow, has given him a mandate to stand firm on his vision of how to solve the current fiscal crisis. For now at least, he is sticking with his proposal of $4tn in deficit reduction over 10 years which includes cuts to Medicare and Medicaid and military spending, but also crucially involves a $1.6tn increase in revenue achieved by taxing top income earners more.
The tax increases would allow the top tax band to rise back to the level that was in place under Bill Clinton: 39.6%.
Jim Manley, a Democratic strategist who was an adviser to Harry Reid, the party's leader in the Senate, told Bloomberg News that the president and his inner circle had radically revised their negotiating position towards the Republicans after they concluded in the wake of the failed 2011 talks that attempts at bipartisan compromise were self-defeating. "They took that lesson to heart and they're not going to allow themselves to get suckered into reaching bad agreements to get a deal," he said.
Both as a symbol of his new more assertive stance, and as a tactical gambit designed to increase his leverage with Congress, Obama has continued to hit the campaign trail even beyond election day to underline his electoral mandate for tax increases on the rich. He has attended a rally in Pennsylvania, and he is sustaining an aggressive outreach campaign through Twitter and his massive database of email addresses encouraging his supporters to raise their voices and make their views known about the fiscal cliff.
But, so far, the Republicans are also holding firm, appearing to be as averse to compromise as the White House. Leaders John Boehner in the House and Mitch McConnell in the Senate are maintaining their hostility towards any tax increases for top earners, while deriding the president for failing to offer any new ideas about how to deal with the rising burden of so-called "entitlements" – Medicare, Medicaid and social security.
"The administration has put something out that polls well: taxing the wealthy. What they haven't done is anything to deal with entitlements, which is painful, and you're not going to have a deal until that happens," said Bob Corker, a Republican US senator from Tennessee.
Amid such dogged grandstanding as the clock ticks, there are a few isolated voices of optimism. Richard Blumenthal, a Democratic House representative in Connecticut, said that he saw evidence of a sea change among Republicans on the vital issue of tax rises for the rich. He told CNN on Monday: "There is a growing group of Republicans who say we really need to raise revenue, not just talk about revenue, but also increase taxes on the wealthiest 2% and they're willing to consider those kinds of taxes that the president's proposed so that middle class Americans, the 98%, will not see any taxes increases."
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image: © Aaron Logan
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