‘Fiscal cliff’ talks could collide with Christmas

For the fourth consecutive year, a major Washington negotiation is on a collision course with Christmas.

President Obama and congressional leaders spoke optimistically after a meeting 10 days ago about avoiding a last-minute fiscal-cliff scramble, tasking staff with coming up with some solutions by this week. But sources close to the negotiations say those talks haven’t gone anywhere on any of the most salient issues.

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Officials said Obama spoke by phone on Saturday with House Speaker John Boehner (R-Ohio) and Senate Majority Leader Harry Reid (D-Nev.), but no additional face-to-face meetings have been scheduled. The delay is a signal that discussions on the staff level have not yet yielded enough progress to warrant a second confab of the five elected leaders who will shake hands on any final agreement — Obama, Boehner, Reid, Senate Minority Leader Mitch McConnell (R-Ky.) and House Minority Leader Nancy Pelosi (D-Calif.).

It is also fanning Republican fears that the lack of urgency displayed by Obama is a deliberate strategy aimed at jamming the GOP into a last-minute agreement more favorable to Democrats. While Republicans have said they are open to new tax revenues and Democrats continue to cite the need for spending cuts, each side is pushing the other to offer more specific proposals of what it could accept.

In a Senate floor speech on Monday, McConnell said the parties “remain at an impasse” on the critical issues of taxes, spending and entitlements. He called on Obama to submit a plan “that has a realistic chance of passing the Congress,” and he warned about what he called “the Thelma and Louise crowd” of liberal Democrats suggesting that lawmakers should simply take no action to stop the cascade of spending cuts and tax increases at year’s end.

“So we’ll continue to wait on the president, and hope that he has what it takes to bring people together to forge a compromise,” McConnell said. “If he does, we’ll get there. If he doesn’t, we won’t. It’s that simple.”

White House press secretary Jay Carney on Monday would say only that the next meeting with congressional leaders would come “at the appropriate time.” In the meantime, top White House aides met with U.S. Chamber of Commerce President Tom Donohue, and House Republicans planned to meet Wednesday with CEOs and civic leaders of the “Fix the Debt” coalition, including Erskine Bowles, a co-chairman of the president’s fiscal commission in 2010.

With just three weeks left before the House is scheduled to close its session, the developments came as little surprise to veteran Washington insiders who expect any deal to wait until the last minute, following the pattern of recent years. In 2009, the Senate stayed in session until the early morning of Christmas Eve to pass an initial version of the healthcare overhaul. The next year, Congress gave final approval to a lame-duck tax package on Dec. 16, and in 2011, House Republicans held out until Dec. 23 before approving — by unanimous consent — a two-month extension of a payroll tax cut.

A Democratic source close to the negotiations said that the White House “definitely” sees running out the clock as to its advantage, since it believes it has more public support for its position of extending middle-class tax rates but increasing them on the wealthy.

The source said that the White House is angling for more specificity from Republicans on how they will get revenue before getting more specific on spending cuts — a mirror image to the demands of congressional Republicans.

A Republican source said the talks have not moved beyond senior policy staff members to include lawmakers or administration officials like Treasury Secretary Tim Geithner or Gene Sperling, director of the National Economic Council.

The White House argues that Obama’s 2013 budget was already filled with specific spending cuts, and it has signaled that it would be open to specific entitlement changes, such as raising the eligibility age for Medicare.

“Republicans haven’t put anything specific on revenues. They are generically talking about ending deductions,” the Democratic source said.

Republican strategist Matt Schlapp, a former Bush political director, said members of his party are worried, however, that Obama’s staff does not speak for the president and that Obama is willing to reverse himself in the middle of negotiations.

In the 2011 talks with Boehner, Obama sought more revenue once the White House learned that a plan being presented by the Senate’s bipartisan Gang of Six included more revenue than Boehner had agreed to.

This lack of trust slows staff talks and makes it more important for Obama to get publicly behind spending cuts, Schlapp said.

“Congress as an institution is rife with factions. And this is a moment when the president could step in and lead,” Schlapp said. “Many folks are waiting to see how he’s going to insert himself.”

But he said the White House seems to believe that waiting until the last minute is in its interest.

“Things don’t tend to get done early in politics if there is no real benefit to getting things done early,” he said.

This time around, congressional leaders briefly stirred hopes of a faster resolution when they emerged from the White House on Nov. 16.

“This isn’t something we’re going to wait until the last day of December to get it done,” Reid told reporters.

But in the 10 days since, they have made little headway. Staff members were instructed to meet over the Thanksgiving break, with the goal of preparing a “framework” to present to the principal negotiators this week. And Pelosi said the group should show “some milestones of success” to build confidence in the markets and among consumers.

Brendan Daly, a former Pelosi adviser now at the Ogilvy public-relations firm, said that markets want more certainty than Congress is providing. He said that the lesson of the 2011 debt-ceiling debacle is that a long period of tension before a deal is struck is bad for the economy.

“That is why Leader Pelosi likes to set goals … in the interim,” he said.

Yet neither a framework nor any milestones of success have thus far materialized.