With no pause for breath, leaders Reid, Boehner stake out 'fiscal cliff' stances

Congressional leaders on Wednesday immediately staked out their stances on the fiscal cliff, barely pausing to breathe after an exhausting campaign for the White House and Congress before seeking leverage in the upcoming talks.

House Speaker John Boehner (R-Ohio) informed his Republican colleagues that he will not give ground to Democrats on raising taxes despite President Obama’s victory on Election Day.

Boehner on Wednesday called for “a down payment” on deficit reduction during the lame-duck session of Congress and said Republicans would accept “new revenue” — but not higher tax rates — in a broader agreement next year.

ADVERTISEMENT
Senate Majority Leader Harry Reid (D-Nev.), speaking hours after his caucus made surprising gains to its majority, countered that his side will not relent on its opposition to extending Bush-era tax rates on wealthier households.

Obama called congressional leaders from Chicago, where he remained for most of Wednesday after his reelection victory.

The president said "he believed that the American people sent a message in yesterday’s election that leaders in both parties need to put aside their partisan interests and work with common purpose to put the interests of the American people and the American economy first," the White House said in a statement.

Obama "reiterated his commitment to finding bipartisan solutions to: reduce our deficit in a balanced way, cut taxes for middle class families and small businesses and create jobs." 

Whether Obama's victory on Tuesday changes anything on Capitol Hill remains to be seen. 

Boehner even before the election warned an Obama win would change nothing, but Reid described it as a game-changer.

He said Obama’s victory was “overwhelming” and noted his party picked up seats in the House and Senate. “That’s not the status quo,” he said.

The election resulted in a government nearly identical to the one that stumbled through talks to raise the debt ceiling last summer. Public disapproval of Washington’s handling of that crisis led to the lowest approval ratings of all time for both Obama and Congress.

Yet after the election, Obama will remain in the White House with Republicans still holding the House, and Democrats still holding the Senate.

The outcome has quickly led to questions about whether the same leaders who struggled to negotiate last summer will have any better luck debating the nation’s fiscal future in the next seven weeks.

Bush-era tax rates are set to expire on Jan. 1, and spending cuts set up by last summer’s debt deal will set in at that time. Economists warn this “fiscal cliff” could cause another recession.

A key issue is tax rates on wealthier households. Obama agreed to extend those rates in 2010, but vowed not to do so again. And Reid on Wednesday signaled a tough line.

“People who are making more than a million dollars a year, the vast, vast majority of them are happy to pay that. The only place that people disagree are Republicans in Congress,” he said.

At the same time, Reid adopted a somewhat conciliatory tone that highlighted his “fine relationship” with Boehner, whom Reid said he had spoken with Wednesday morning.

The Democratic leader said he would not “draw any lines in the sand” and expressed his conviction that Boehner not adopt a hard-line stance.

Boehner has indicated that he does not think the abbreviated lame-duck session is the appropriate time for Congress to approve a major deal to reduce the deficit by hundreds of billions of dollars over the next decade. One criticism of a lame-duck deal is that newly elected lawmakers would not have a chance to vote on it. And some congressional insiders think such a deal is far too complex to finalize in only a few weeks.

Reid, however, said Democratic leaders would not postpone major fiscal decisions any longer.

“The Republicans have to make a choice. We’re willing to work something out. We’re willing to work it out sooner rather than later. I don’t know how they think they benefit by waiting until sequestration kicks in,” he said. “I’m not for kicking the can down the road, I think we’ve done that far too much.”

Reid said waiting another six months would not make it any easier for Democrats and Republicans to reach a broad deal.

“I think we should just roll up our sleeves and get it done,” he said.

Reid said he did not think an increase in the debt ceiling would be part of a grand bargain on deficit reduction in the lame-duck session. He predicted it would be addressed next year and Congress would vote to raise it. The majority leader said Democrats would not be cowed if Republicans attempt to hold the debt ceiling hostage to negotiate entitlement reforms.

While leaving the Senate television studio, Reid told reporters that Social Security reform should not be part of any broad deficit-reduction deal.

“We’re not messing with Social Security,” he said when asked about using a new formula known as chained CPI — related to the Consumer Price Index — to calculate cost of living adjustments to benefits. 

—This story was posted at 1:58 p.m. and updated at 5:38 p.m.