At the beginning of the fiscal cliff negotiations, the press gathered to accommodate the photo ops of Congressional leaders pairing up with the president to hammer out a deal that would suit the needs of the American people. President Obama made it a point to show that he would be hands-on, helping in the negotiations.
However, almost immediately, things began to fall apart as Democrats refused to budge from the idea that tax hikes were needed to reduce the deficit, while simultaneously refusing to make any meaningful budgetary cuts.
President Obama went back on the campaign trail to sell the Democrats’ position, but little else has been done by the president who has been noticeably absent from the meetings. He has had harsh words for Congress, accusing them of not doing their jobs, and has issued harsh words for Republicans who may wish to use the looming debt ceiling crisis as leverage, saying that it was a game that he wouldn’t play.
Now, as lawmakers scramble to throw something together before midnight tonight, Obama has re-entered the scene to share that a deal is close, but not finished yet.
In an odd press event that more closely resembled a campaign event than a press conference, President Obama spoke to a crowd of supporters and mocked Congress while claiming that a deal was “within sight,” but offered no specifics.
“A GOP source told CNN negotiators are ‘very close’ to a deal. The sticking point is $24 billion in spending cuts being sought by Republicans in place of deeper cuts that would automatically take effect at midnight,according to the source.
‘It’s like looking under the cushions at this point,’ the source said. ‘If we can’t find that at this point, we should pack this place up.’
A congressional Democratic source agreed that spending cuts are the main hold up now.”
However, spending cuts have been the main hold up for weeks now. While moderate Republican leaders have softened their stances on the issue of increased taxes, conservative leaders are still holding strong against the principle. Where the two factions unite, however, is in the call for serious spending cuts- a task which Democrats refuse to do.
As America heads towards the cliff, many wonder what kind of deal is being crafted behind closed doors. CNN further reports:
“The proposal under discussion Monday afternoon called for rolling back tax rates on the highest-income earners to Clinton-era levels, increasing the estate tax rate, extending unemployment benefits and potentially putting off the $110 billion in automatic spending cuts called for in the legislation that created the cliff, according to sources close to the process.
A source familiar with the negotiations said the proposal under discussion would generate $600 billion in revenues by ending the Bush-era tax cuts on individuals with incomes above $400,000 and families over $450,000. Their tax rate would be 39.6%, the same as it was in 2000 during President Bill Clinton’s presidency. The top income rate is currently 35%.
The deal would also increase the estate tax to 40% from the current 35% level and cap itemized deductions for individuals with incomes above $250,000 and household income over $300,000, the source said.
In addition to the tax proposals, also under discussion is a proposal to delay the $110 billion in automatic cuts in domestic and military spending due over the next nine months, a draconian approach called sequester that was created by Congress to address the impact of high deficits and debt on the U.S. economy.”
In truth, while the deal is being crafted with great optimism, GOP leaders will have a tough time selling any deal that includes tax hikes to conservative leaders in both houses of Congress.