Yesterday John Boehner made the counter offer to the President's initial offer to avoid going over the fiscal cliff. The President proposed 1.6 trillion in new revenues by taking the top tax rate up from 35% to 39.6% and the second highest tax rate up from 33% to 36%, which he estimates would bring in 1 trillion. The President also suggested eliminating unspecified deductions which he estimates would bring in another 6oo billion. He would also cut 600 billion in spending including 250 billion from medicare. However the President also wants 200 billion in new spending for jobless benefits, public works projects, and aid for struggling home owners. So it would equal 2 trillion in savings.
Yesterday Boehner responded with an offer of eliminating unspecified deductions that he estimates would bring in 800 billion.
On our show yesterday I (Kelly) explained my frustration with Boehner not making a serious offer. The Democrats are holding all the cards regarding the financial cliff, because if they do nothing everyone's tax rates go up, and then they can negotiate for an "Obama tax cut for the middle class", which would be political suicide if the GOP blocked in hopes of getting a tax cut for everyone.
A lot of economists who project going over the fiscal cliff will send us in to recession, base that prediction on the fact that it happens so suddenly. If the tax increases were staggered in, there's little doubt that it would be better for the economy.
Republican's can't come to the table with less than half of what the President wants, when he doesn't need your vote to get everything he's proposing. He also ran very loudly on the point that he was going to "raise tax rates on the rich". Romney ran on the idea of eliminating tax reductions to increase revenue, and he lost badly. The President's proposal actually combines both ideas. Which allows him to say I've heard what our friends across the aisle have suggested and in the spirit of bi partisanship have incorporated it in to our plan.
I want to be clear about this. I don't agree with the President's plan. I believe it will hurt all of us. But at this late hour our opinions no longer matter. Congress goes on Christmas break in 8 working days. (Last day in session is 12/14/12), and the Democrats like the fiscal cliff. If you are negotiating with someone who has all the power you need to improve their hand somehow.
Here's my suggestion which opens me up for mocking but I'm trying to help save the economy from what I perceive as a guaranteed recession. Agree to the higher tax rates but stagger them in over a couple of years. Agree to their 600 billion in closing loopholes. And if they stagger both tell them we'll cut the 500 billion that is coming out of the military but rather than doing it through sequestration, which just about everyone agrees is going to hurt our military personnel, do it the way Tom Coburn suggests in his plan that he put together with officials at the Pentagon that actually cuts 600 billion! That's giving Democrats the revenues they want. It allows them to go to their base and say "we raised the rich sob's tax rates like we promised", and we're helping to cut in to the deficit. It's not perfect, but politics isn't an all or nothing game. The Republican's can tell American's it was our plan that was used. We are the party of fresh ideas. The party of problem solvers. So both parties have something to sing about.
Now counter that with Jim Demint's press release today.
"Speaker Boehner's $800 billion tax hike will destroy American jobs and allow politicians in Washington to spend even more, while not reducing our $16 trillion debt by a single penny.” He goes on to re quote all of the GOP Positions about fiscal responsability and DC is addicted to spending. He ends it with; "We can stop the fiscal cliff with the bill that House Republicans already passed that simply extends the current tax rates and replaces the defense cuts with reductions in wasteful spending.”
Yes Jim if only the Democrats in the Senate followed the lead of Republican's in the house. But as we all now know the Democrats don't mind going over the fiscal cliff, so your point is mute.
This is grandstanding, and the worst kind of grandstanding. The kind where you want to make it appear that you're the only sane person at the table, and everyone else is a dope. And Jim, if you end up reading this, I think you may in fact be the smartest guy in the room. I've always been a big fan of your voting record. However your vote is not required for this.It's going to happen without a vote. Republican's with the ability to help lead the Democrats away from the cliff is what's needed. Your throwing stones at Democrats (and Republican's) when you need to be offering to break bread with them.