The streamers have been swept up and the noise makers have been silenced. With the election behind us, the president and Congress must still sit down and negotiate a deal to avert impending tax increases and automatic budget cuts before the year’s end.
This scenario is called the “fiscal cliff.” If history is any guide, the lame-duck session of Congress will reach the edge of the cliff before coming to any agreement — assuming an agreement can be reached at all.
Senate Majority Leader Harry Reid has already taken one item off the table — Social Security — which he said was not “to be messed with” during fiscal reform negotiations.
“The president campaigned around the country saying, ‘We know what the problems are with this fiscal problem. We just need some revenue,’” Reid said Wednesday at a news conference on Capitol Hill. The president has mirrored this position, calling for the Bush tax cuts to expire for only the top earners, those earner more than $200,000.
“I think we know what the issue is. We need to solve that issue. Waiting for a month, six weeks, six months, that’s not gonna solve the problem. We know what needs to be done. I think that we should just roll up our sleeves and get it done.”
Both parties have been quick to protect their policy priorities. During the debt ceiling negotiations in the summer of 2011, Republicans refused to budge taxes. Democrats now seem unwilling to move on an entitlement program that the Congressional Budget Office warns will be insolvent in twenty years.
House Speaker John Boehner urged against tax increases Wednesday.
“The problem with the President’s proposed tax hike is that while it may generate more revenue, it will also mean over 700,000 fewer jobs for American workers – that’s the equivalent of roughly every job created in the United States in the last 5 months,” Boehner said in a statement.
“There is a better path forward than simply increasing tax rates, and one in which both sides can claim victory. We can address both our jobs crisis and our debt crisis by focusing on tax reform that strengthens the economy.”
Boehner points to bipartisan support for tax reform to close loopholes and lower rates, which he says would create a fairer tax code and more jobs, while raising additional revenue.
While the Democrats gained some Senate seats, the elections mostly reaffirmed the status quo: Democratic-controlled White House and Senate, Republican House.
“[Higher taxes] was the issue,” Sen. Reid said Wednesday. “The mandate was look at all the exit polls, look at all the polling, the vast majority of the American people, rich, poor, everybody agrees that the rich — richest of the rich have to help a little bit.”
“The only mandate that comes from a divided government is the requirement to work together,” Boehner and House Ways and Means Committee Chairman Dave Camp said in a joint statement.
“Tax reform is the compromise and the solution, and I urge the President to take up the Speaker’s offer to work together in our nation’s best interest on fundamental and comprehensive tax reform – just as President Reagan and Speaker Tip O’Neill did in the 1980s.”
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