WASHINGTON — House Speaker John Boehner offered newly reelected President Obama the faint framework of a deal to avoid a “fiscal cliff” on Wednesday, suggesting that Republicans could accept unspecified “new revenue,” but only as part of an overhaul of the tax code.
“We’re ready to be led, not as Democrats or Republicans, but as Americans,” said Boehner. “We want you to lead — not as a liberal or a conservative, but as the president of the United States of America. We want you to succeed.”
But Boehner, who earlier in the day talked on the telephone with Obama about the impending deadline to avoid the fiscal cliff of tax hikes and spending cuts, was purposefully vague about details of a compromise. After reading a speech to reporters, he refused to take questions. Democrats and some analysts promptly expressed doubts that Boehner was offering anything new but expressed hope that it signaled the start of a new round of negotiations.
Still, in the aftermath of an election that essentially kept the status quo — with Obama in the White House, Boehner and Republicans in charge of the House, and Democrats controlling the Senate — any step toward avoiding the year-end fiscal cliff was welcomed.
The day after the election, the president phoned Boehner and Senate Minority Leader Mitch McConnell, the top Republicans on Capitol Hill, as well as Senator majority leader Harry Reid and House minority leader Nancy Pelosi, both Democrats, to talk about the legislative agenda for the rest of the year.
‘We’re willing to accept new revenue, under the right conditions.’
With the defeat of presidential candidate Mitt Romney, Boehner is widely viewed as the party’s de facto leader. Boehner previously has discussed the outline of a similar deal with Obama, but the effort faltered due in part to opposition from Tea Party members and the difficulty of resolving such a major issue before the election. Romney suggested a similar deal during his campaign.
Boehner and most Republicans have ruled out one of the central tenets of Obama’s campaign, saying they won’t accept higher taxes on the nation’s wealthiest Americans.
Senator John F. Kerry of Massachusetts, who served on a committee that tried to come up with a solution to avoid the fiscal cliff, said both sides came close to reaching an agreement last year. But he said the effort ultimately failed because of unwillingness by the Tea Party wing of the Republican Party to support tax increases.
Unless a deal is reached by year-end, a series of tax hikes and hefty spending cuts would go into effect, which some fear could lead to another recession. As a result, Kerry said he hopes that the deadline will prompt a more successful round of negotiating. “Certainly the imperative of avoiding recession is real for people,” Kerry said. “I’m taking colleagues’ temperatures and have already talked to a bunch of Republicans, and I am hopeful we can get there on a balanced compromise.”
Reid also urged compromise. “I know how to fight. I know how to dance,” he said. “It’s still better to dance than to fight. Not everything has to be a fight.”
Congressional leaders will have little time to broker a deal. They are expected to meet next week in hopes of coming up with an agreement, even if only to temporarily extend the George W. Bush-era tax cuts and other tax breaks into the next session of Congress.
The political stakes — not to mention the economic ones — are high for both parties. Despite the mixed message of the election, voters expressed a clear preference for a bipartisan solution, and neither party wants to be seen as being responsible for another round of gridlock in the nation’s capital.
Parsing his words carefully, Boehner said, “For purposes of forging a bipartisan agreement that begins to solve the problem, we’re willing to accept new revenue, under the right conditions.” Those conditions include cutting the cost of entitlement programs such as Medicare and “reforming our tax code to curb special-interest loopholes and deductions.” That, in turn, would strengthen the economy and “means more revenue, which is what the president seeks.”
Bruce Bartlett, a former Reagan administration official who has been critical of the Republican position, said that he saw nothing new in Boehner’s outline, which he said is based on the supply-side presumption that a cut in tax rates will bring in more tax revenues.
“Boehner was just repeating the exact same words he used last summer,” Bartlett said. “The only revenue increase he is willing to accept is one that arises from faster economic growth. I see no evidence that Republicans are any less opposed to legislated tax increases than they were on Monday.”
Democrats and Republicans agree that the specter of another recession looms if they do not confront the challenges posed by an economic and political crisis over taxes and automatic spending cuts that combined could withdraw $600 billion from a struggling economy.
Republicans want to extend the Bush-era tax cuts, saving taxpayers about $180 billion next year, but Democrats want them extended only for families making less than $250,000 annually to minimize harm on social programs.
In January, the first round of automatic cuts begins under a deficit-reducing deal that would cut $1.2 trillion in projected spending over the next decade. The first cuts of about $110 billion begin at the start of the year, divided roughly equally between defense and domestic programs.
Democrats expressed skepticism about whether Republicans are willing to make concessions, in part because much of the negotiations are likely to be left in the hands of the failed vice presidential candidate, House Budget Committee Chairman Paul Ryan. Earlier this year, Ryan won approval of a budget outline without a single Democratic vote.
Representative Chris Van Hollen, the ranking Democrat on the House Budget Committee, said that it sounded like Republicans are sticking with their refusal to raise taxes on the wealthiest Americans.
“The Republican caucus has to ask itself whether they want to be part of the solution or whether they will double down on the extreme Tea Party agenda,” Van Hollen said. “They are having a conversation in the Republican Party now over what direction they want to take, and hopefully some of the more moderate voices will prevail.”
Analysts said the looming deadline of the fiscal cliff could force a deal.
“They don’t have any choice,” said Charlie Cook, editor of the nonpartisan Cook Political Report. “They have to address these issues. The public will force them and, quite frankly, the business and financial markets will force them.”
Rob Nichols, president of the Financial Services Forum, a business group, said a compromise must be reached to help the economy. “The stakes are just so significant and so high,” said Nichols.