By Alexander Bolton - 11/17/12 11:00 AM EST
A rift has emerged between Speaker John BoehnerJohn BoehnerOvernight Finance: Puerto Rico bill clears panel | IRS chief vows to finish term | Bill would require nominees to release tax returns Overnight Defense: Pentagon chief fears sequestration's return GOP senator: Reid's 'ramblings' are 'bitter, vulgar, incoherent' MORE (R-Ohio) and Senate Majority Leader Harry ReidHarry ReidOvernight Finance: Puerto Rico bill clears panel | IRS chief vows to finish term | Bill would require nominees to release tax returns Wasserman Schultz fights to keep her job Overnight Defense: Pentagon chief fears sequestration's return MORE (D-Nev.) over the timing of a deficit-reduction deal, which they discussed at the White House Friday.
Republicans say a broad package would be too complex to finish in the next six weeks. But waiting until next year to complete an agreement would also help them politically as President Obama’s election mandate is likely to fade.
BoehnerJohn BoehnerOvernight Finance: Puerto Rico bill clears panel | IRS chief vows to finish term | Bill would require nominees to release tax returns Overnight Defense: Pentagon chief fears sequestration's return GOP senator: Reid's 'ramblings' are 'bitter, vulgar, incoherent' MORE told Obama, Reid and House Democratic Leader Nancy Pelosi (D-Calif.) at the meeting that tax reform and entitlement reform should wait until 2013, according to a Boehner aide.
“The Speaker said he believes 2013 should be the year we begin to solve our debt problem through tax reform and entitlement reform, and proposed that both parties work together to avert the fiscal cliff together in a manner that ensures 2013 is that year,” said the aide.
Boehner proposed both parties commit to working toward a framework for tax and entitlement reform in 2013 that sets revenue and savings targets.
Democrats told Boehner they would not accept any postponement of a debt deal unless Republicans agreed to a substantial down payment, and pushed for the up-front funds to come from raising tax rates on the highest two income brackets, according to a Democratic aide familiar with the meeting.
By pressing for significant progress on a deficit-reduction deal during the lame duck, Democrats are hoping to push Republicans to accept hefty tax hikes before the new year.
Republican leaders argue that raising the top income tax rates would hurt small-business jobs. They say increasing tax rates on families earning more than $250,000 would raise only $68 billion in 2013, just enough to pay for six days of federal spending.
“There is a split between Boehner and Reid,” said a senior GOP aide.
Reid emerged from Friday’s meeting calling for a major agreement to be completed next month.
“There is no more ‘let’s do it some other time.’ We’re going to do it now,” he said at a press conference with other leaders. “We feel very comfortable with each other and this isn’t something we’re going to wait until the last day of December to get it done.”
A Boehner aide said the speaker told Obama, Reid and Pelosi that the goal for the lame-duck sessions should be to “settle on long-term revenue targets for tax reform as well as targets for savings from our entitlement programs.”
Rodell Mollineau, a Democratic strategist and former senior aide to Reid, said, “Boehner understands after the results of this election that he’s in a far diminished place to begin negotiation and is probably stalling for time to see if the political climate gets better.”
Democrats have begun to pressure Boehner to reach a major compromise in the lame-duck session.
Speaking to reporters after Election Day, Reid said, “I’m not for kicking the can down the road. I think we’ve done that far too much. I think we know what the issue is.
“Waiting a month, six weeks, six months, that’s not going to solve the problem. We know what needs to be done,” he added.
Steve Elmendorf, a Democratic lobbyist and former House Democratic leadership aide, said Reid sees a political disadvantage in extending the talks.
“Reid wants to get it now because Democrats and the White House have the maximum leverage with expiration of tax cuts and the sequester,” he said in reference to pending cuts to defense programs. “If you wait three months or six months, you give away some of your leverage.”
Treasury Secretary Timothy Geithner, in an interview with Bloomberg TV’s “Political Capital with Al Hunt” Friday, said a deal “is doable within several weeks."
Geithner, who attended Friday’s meeting, said a compromise should “lock in some upfront savings that help restore fiscal sustainability and set up a process for reaching agreement on the additional savings that we’re going to need.”
He questioned whether the long-term revenue and savings targets floated by Boehner could be enforced.
“If this political system again, with all that's at stake for America, decides to defer again, in the hopes that Americans will give us more time to come together, I think you'll - I think it would be a mistake,” he said.
“I think you leave - you leave this huge cloud of uncertainty hanging over the economy. And more importantly, perhaps, you reduce the incentives both sides now have to come together,” he warned.
Obama signaled at a press conference Wednesday that the upfront savings should come from raising taxes on the wealthy, citing a Senate-passed bill that allowed rates on families earning more than $250,000 to expire.
He said Congress could either let the Bush tax rates expire for all income brackets or “pass a law right now that would prevent any tax hike whatsoever on the first $250,000 of everybody’s income.”
“The Senate has already passed a law like this. Democrats in the House are ready to pass a law like this,” he added.
The Senate bill passed in July would let income tax rates for families earning more than $250,000 expire and prevent the Alternative Minimum Tax from expanding to catch middle-income families.
Republicans are expected to offer an alternative down payment that would consist of savings from reforming entitlement programs, said a Democratic source familiar with Friday’s meeting.
A Republican aide said “there was discussion on this, but no resolution.”