President Barack Obama will use a Michigan speech today to continue pressuring Republicans toward acceptance of higher taxes, only one day after he quietly met the GOP’s leader, House Speaker Rep. John Boehner.
The closed-door Sunday meeting in the White House was the first face-to-face meeting of the two leaders in three weeks, and it comes as business executives and stock-pickers prepare for the scheduled January arrival of higher taxes and defense cuts, dubbed the “fiscal cliff.”
Both offices released an identical statement. “This afternoon, the President and Speaker Boehner met at the White House to discuss efforts to resolve the fiscal cliff. We’re not reading out details of the conversation, but the lines of communication remain open,” said the statements.
The meeting bolsters reports that Boehner and Obama have decided to exclude their political allies from the closed-door talks.
That simplifies negotiations, but is a high-risk strategy for both leaders. Either or both might agree to a deal that would split their own party.
Already, Sen. Jeff Sessions, the Republican budget chief in the Senate, has declared the closed-door meetings to be a public relations trap for the GOP.
Unless the GOP approves higher tax rates for investors and entrepreneurs, Obama says he’ll veto any short-term fix to the tax-and-cut “fiscal cliff,” even if he causes across-the-board taxes increases and painful spending cuts.
Those taxes and spending cuts would cause the government to drain up to $500 billion from the economy by the year’s end, and would likely boost unemployment. The resulting economic damage will also curb tax payments, likely increasing the federal government’s annual deficit back toward the 2012 level of $1 trillion.
GOP leaders say they want the president to sign legislation that would extend current tax rates for middle-class and wealthier Americans, and also cancel planned spending defense cuts. GOP leaders also want the president to negotiate major spending curbs.
Obama’s 10-year budget plans predict the government will borrow roughly 8.6 trillion by 2022. That spending will grow government-created debt from $10.5 trillion in 2009 to $25 trillion in 2022, according to an estimate by the Republican staff on the Senate Budget Committee.
That would average out to a total debt of approximately $150,000 for every working American in 2022. The annual interest payments due for that debt will depend on the interest rate.
In February, the Bureau of Labor Statistics predicted the workforce would grow slowly to reach 164 million in 2020.
Some Democrats say the president’s focus on higher tax-rates is inadequate for the fiscal crisis, partly because it would only provide the federal government with $400 billion over 10 years, or $40 billion a year.
“That alone won’t solve the problem — we have to cut spending,” Democrat Erskine Bowles said on CBS’s “Face The Nation” talk show on December 9.
“We’ve simply made promises we can’t keep,” he said. “We’ve got to face up to it, and we’ve got to have a bold decision in order to make sure we put our fiscal house in order,” said Bowles, who served as President Bill Clinton’s chief of staff, a Democratic Senate candidate in North Carolina, and Obama’s pick to co-chair his 2010 spending advisory panel.
Bowles’ statement was highlighted by Boehner’s press staff at his website.
Obama’s pressure campaign against the GOP includes Monday’s speech at a Redford, Mich., auto-plant. “At Daimler Detroit Diesel, the President will tour the plant and then deliver remarks to workers,” said a White House statement released Sunday.
Obama will jet to Michigan in the morning and return in the afternoon. He’s expected to say that he will sign a law getting American families $2,000 a year in tax-cuts, but only if Republicans pass a bill that excludes households making over $250,000 a year.
Obama’s hard-line stance is being aided by lobbying from Obama-allied corporations. GOP officials also say the president is slow walking negotiations to increase pressure on GOP leaders, and is refusing to negotiate curbs to government spending.
Obama’s pressure is having some impact.
On Dec. 9, Tennessee Republican Senator Bob Corker said a GOP retreat on taxes will put it in a better position to curb spending.
A tax increase is “the best route to take,” he said, because as early as February, the administration will bump up against its borrowing-limit, which is set by Congress. The GOP can withhold approval for more borrowing unless the president accepts some curbs on spending, Corker told Fox News.
“The shift in focus in entitlements is where we need to go… the leverage is going to shift as soon as we get beyond this issue… to our side,” he said.
However, although several GOP legislators have signaled a retreat on tax rates, the vast majority of GOP legislators have united behind Boehner’s compromise proposal that would freeze tax rates while setting limits on loopholes and tax breaks commonly used by wealthy Americans.
That tax-revamp could get Obama $800 billion over a decade without imposing a huge hit on business incentives, Republicans say.
So far, Obama and most Democrats have not signaled any willingness to back down on their demand that Republicans agree to abandon their ideological support for low tax rates.
Their hard-line stance is helped by polls showing that a slight majority of Americans would blame the GOP if Obama’s refusal to preserve current tax rates carries the nation over the economically damaging “fiscal cliff.”
