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Are parties hurtling toward ‘fiscal cliff’?
Bowles sees little change on taxes, spending
Question of the Day
With little tangible headway being made in Washington on averting the looming federal taxes-and-spending crisis, a key observer said Wednesday that he puts the chances of Congress reaching a deal before the Jan. 1 “fiscal cliff” deadline at less than 1 in 3.
Erskine Bowles, who ran President Obama’s 2010 deficit commission that called for tax increases and spending cuts to fix perennial deficits, blamed both sides for his pessimism, saying Republicans will have to budge on their opposition to raising income-tax rates and that the White House hasn’t been serious enough about embracing real spending cuts to big programs such as Medicare.
“I believe the probability is we are going over the cliff,” said Mr. Bowles, who has become a chief voice for striking a deal, and who met with the White House on Tuesday and with Capitol Hill leaders on Wednesday.
His pessimistic outlook was tempered by new signs of compromise, including from House Minority Leader Nancy Pelosi, who said a tentative agreement Mr. Obama and House Speaker John A. Boehner had struck last year, but which was scuttled by opposition from both parties, should be the start of renewed talks.
“Start with that and go from there to reach an agreement,” she told reporters before meeting with CEOs and other Americans who are pressing both sides on Capitol Hill to forgo partisan principles and strike a deal.
Mr. Obama and congressional leaders all say they are optimistic that something can be completed in time, though they haven’t agreed on much of anything else.
In an effort to get talks going, Mr. Obama is deploying top aides to Capitol Hill on Thursday to meet with congressional leaders.
It’s been two weeks since the president and top leaders sat down, and those pushing for action, including Mr. Bowles and former Sen. Alan K. Simpson, co-chairman of that 2010 deficit panel, said they were surprised at the casual pace, with Congress taking off all of last week for Thanksgiving and having only 10 days of work scheduled before the end of the year.
All sides are trying to figure out how to head off a collision of budget priorities and economic realities.
The Bush-era tax cuts are slated to expire Jan. 1, and $110 billion in automatic spending cuts, split between defense and domestic programs, are due to take effect Jan. 2.
The consensus among economists is that letting both happen would risk plunging the economy into recession. But, the Congressional Budget Office has warned, delaying them would only make the pain worse in the long run.
Congress and the White House are trying to chart a middle course that eases the worst of the pain while bringing deficits under control — a tricky balancing act as they are buffeted by competing pressures from their political bases.
Republicans have said they will consider raising taxes, though only if it comes from eliminating tax breaks rather than raising tax rates. They insist that any new revenue be coupled with limits to entitlement programs such as Medicare, which is projected to crowd out other spending in coming decades.
But Democrats, led by Mr. Obama, had said that tax rates must be allowed to go up for couples making at least $250,000, or individuals who make $200,000 or more. The president has called for rates to revert from 35 percent to 39.6 percent, which was their level under President Clinton.
Mr. Bowles, who met with Mr. Obama and his economic team on Tuesday, said he saw some flexibility from the White House. Mr. Bowles said they signaled they were willing to accept a top rate lower than 39.6 percent, but he said they insisted they must have some increase from current levels.
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