U.S. President Barack Obama, a pickup basketball player of some repute around Washington, is subjecting his opponents in high-stakes budget talks to a full-court press.
Mr. Obama used his first one-on-one interview since the election Tuesday to swat away the first official proposal from Republicans to resolve the “fiscal cliff,” calling House Speaker John Boehner’s proposal “out of balance” and mathematically challenged.
The President’s rejection was unsurprising: Mr. Boehner said Republicans would accept an increase in tax revenue of $800-billion (U.S.) over a decade, half of what the Obama administration asked for in its opening bid last week.
Noteworthy, however, was the rapidity of his response. It suggests an aggressiveness that some Democrats say was lacking in Mr. Obama’s dealings with Republican lawmakers over the past two years. The President appears intent on taking full advantage of the momentum of his re-election to keep Republicans on a back foot. A poll sponsored by the Washington Post and the Pew Research Center showed Tuesday that a majority of respondents would blame Republicans if politicians fail to resolve their differences by the end of the year.
“Unfortunately, the Speaker’s proposal right now is out of balance,” Mr. Obama in an interview that aired over the lunch hour on Bloomberg Television. “When you look at the math, it doesn’t work.”
To make his riposte, the President chose the financial news channel watched by traders and business leaders, a group whose members lament daily about how Washington’s protracted budget deliberations are hurting the economy by creating a fog over future tax policy.
At issue is a combination of $500-billion in tax increases and $100-billion in spending cuts slated for next year. An accident of previous budget compromises, forecasters such as the International Monetary Fund say the “fiscal cliff” would cause a recession if left unaltered.
Simply rewriting the law to delay the measures until the economy is stronger is off the table. After four consecutive years of budget deficits in excess of $1-trillion, and with the debt on track to approach 100 per cent of gross domestic product in 10 years, Democrats and Republicans agree the time has come to get serious about the budget.
The end of the year has emerged as a deadline for a plan to resolve the “fiscal cliff,” even though neither the tax increases nor the spending cuts would bite immediately in the New Year.
While significant spending cuts will be necessary, the debate for now revolves around tax increases. Mr. Obama insists that the rates paid by the wealthiest 2 per cent of taxpayers should revert back to previous levels as scheduled, a shift the White House says would generate $1-trillion over a decade.
Mr. Boehner is resolute that Republicans won’t agree to higher rates, even for the wealthiest, arguing that doing so would hurt economic growth by curbing consumer demand and cutting into the profits of small businesses, some of which are taxed at the individual rates of their owners.
Republicans say enough revenue can be raised by closing loopholes and curbing tax breaks. After Mr. Obama’s interview, Mr. Boehner issued a statement calling on the President to offer a proposal that had a realistic chance of passing Congress. “We’re ready and eager to talk with the President about such a proposal,” Mr. Boehner said.
There likely will be several more days of this sort of back-and-forth as both sides seek maximum advantage. Asked if he was ready to meet with Mr. Boehner directly, Mr. Obama replied that the “issue right now is not me sitting in a room.”
Although failure is possible, most in Washington a last-minute compromise remains the most likely outcome. Mr. Obama said Tuesday that he would like to see a “process” established that would review and overhaul the tax code in the New Year. Remaining insistent that rates for the rich must rise on Jan. 1, Mr. Obama said he is nevertheless open to the notion of later cutting those rates, if the review shows that enough revenue could be raised in other ways to satisfy his deficit-reduction goals.
But to avoid the “cliff,” the President insisted that Republicans will have to back down. “What I’m going to need…is an acknowledgement (from Republicans) that folks like me can afford to pay a little higher rate,” he said.