'Fiscal Cliff' talks morphing into high-stakes game of political chicken

Dec 3 2012

White House negotiators and GOP lawmakers remain at odds over a deficit-reduction plan with only weeks to go before automatic spending cuts and tax increases are triggered. Policymakers seek a two-step deal with an initial round of spending cuts and changes to the tax code in January, followed by an overhaul of the tax code and entitlement programs next year.

The Wall Street Journal: Fiscal Cliff Talks At Stalemate
The White House and congressional Republicans remained at loggerheads-;in both public and private-;over how to design a deficit-reduction package, with just a few weeks remaining before the nation hits the fiscal cliff. … Policy makers are aiming to secure a two-step deal by year-end. The first would lock in an initial round of spending cuts and potentially make changes to the tax code that would take effect in January. The second would require policy makers to pursue an overhaul of the tax code and entitlement programs, with the White House setting August as its target date for the negotiations to end (Paletta and O'Connor, 12/3).

The Associated Press/Washington Post: White House, Republicans Play Game Of Political Chicken As Fiscal Cliff Nears
The White House says Republicans should come clean about how much they're willing to raise tax rates on the rich. Republicans counter that President Barack Obama's latest plan is a joke that avoids tough decisions on the nation's biggest entitlement programs, including Medicare (12/3).

The New York Times: Negotiators Leading Talks On Fiscal Crisis Defend Stands
The separate television appearances of the two men came after their private meeting on Capitol Hill on Thursday, when Mr. Geithner outlined the president's positions for about $4 trillion in deficit reduction over the first 10 years to Mr. Boehner and the No. 2 Republican in the House, Eric Cantor of Virginia. The specifics were the same as those proposed by Mr. Obama in his budget earlier this year, without any additional concessions. The proposal includes $1.6 trillion in new revenue from upper-income taxpayers; $600 billion in reduced spending for Medicare, Medicaid, farm subsidies and other programs; $1 trillion in other spending cuts that the president and Congress committed to last year for the coming decade; and an $800 billion reduction in projected war spending, reflecting the winding down of American combat operations overseas (Calmes, 12/2).

The New York Times' News Analysis: Criticized As Weak In Past Talks, Obama Takes Harder Line
His approach is born of painful experience. In his first four years in office, Mr. Obama has repeatedly offered what he considered compromises on stimulus spending, health care and deficit reduction to Republicans, who either rejected them as inadequate or pocketed them and insisted on more. Republicans argued that Mr. Obama never made serious efforts at compromise and instead lectured them about what they ought to want rather than listening to what they did want. Either way, the two sides were left at loggerheads over the weekend with less than a month until a series of painful tax increases and spending cuts automatically take effect, risking what economists say would be a new recession (Baker, 12/2).

The Wall Street Journal: GOP Takes Aim At Entitlements
Senate Minority Leader Mitch McConnell outlined potential changes to Medicare and Social Security in an interview Friday, providing fresh clarity on the concessions Republicans would like to see from Democrats ... Mr. McConnell (R., Ky.) said bipartisan agreement on higher Medicare premiums for the wealthy, an increase in the Medicare eligibility age and slowing cost-of-living increases for Social Security could move both parties closer to a budget deal ... Some Democrats have said they were open to more so-called means testing in Medicare, which would charge higher premiums to higher-income recipients (Bendavid and Hook, 11/30).

The Washington Post: Lindsay Graham: 'I Think We're Going Over The Cliff'
"I think we're going over the cliff. It's pretty clear to me they made a political calculation. This offer doesn't remotely deal with entitlement reform in a way to save Medicare, Medicaid and Social Security from imminent bankruptcy. It raises $1.6 trillion on job creators that will destroy the economy and there are no spending controls," Graham said on CBS's "Face The Nation." Graham had signaled a willingness to violate Grover Norquist's anti-tax pledge to avert the "fiscal cliff" if Democrats made an effort to reform entitlements. But he said Sunday the White House's plan for entitlement reform was laughable (Sullivan, 12/ 2).

The New York Times: Trusted Aide To Obama Faces Test in Budget Showdown
When President Obama was locked in painful spending negotiations with House Republicans last spring, his exceedingly meticulous budget director, Jacob J. Lew, went to the Oval Office to propose some complex budget changes. ... With his owlish glasses and low-key manner, Mr. Lew may come off as just a policy nerd. But he is a fierce negotiator. When defending social safety net programs, particularly those like Medicaid that help the poor, he morphs into a warrior, Republicans say, though he has proved willing to make concessions (Stolberg, 12/1).

Politico: The Cold, Hard Realities Behind Medicare Cuts
Democrats have said they can cut Medicare spending without touching seniors' benefits. But here's the reality: They can't get several hundred billion dollars out of Medicare without at least some beneficiaries taking a hit. And that could be a big problem if the framework for a fiscal cliff deal calls for $400 billion in entitlement savings -; most of which would be likely to come from Medicare (Haberkorn and Cunningham, 12/2).

CQ HealthBeat: Republicans Point To Health Care, Social Security Changes In Fiscal Deal
Republicans may be sharply denouncing what they called an unrealistic fiscal proposal from President Obama, but beneath that heated rhetoric lawmakers and conservatives also pointed Friday toward areas of potential compromise and broad suggestions for the changes they want to see in entitlement programs. Those included calls for changes in Medicare, Medicaid and Social Security that stop well short of overhauling those programs, as GOP leaders have sought amid this year's budget and electoral battles, but add up to the kinds of savings Republicans want in exchange for higher revenue. "I'm not dogmatic and ideological on fixing problems but this president is losing all ability to negotiate with Republicans who want to solve problems with the kind of offer he put on the table yesterday," Rep. Pat Tiberi, R-Ohio, told reporters (Goldfarb and Weyl, 11/30).

CQ HealthBeat: Drugmakers Hardest Hit If Cliff Deal Includes Obama Cuts
Who are the biggest losers if a fiscal cliff deal includes the health care cuts put on the table by President Barack Obama in an initial offer this week? Well, the pharmaceutical industry, skilled nursing facilities, teaching hospitals and imaging suppliers would not be happy. Neither would future seniors. The drugmakers in particular would take a hit to their profits. And future seniors would see higher charges for Medigap policies that pick up charges Medicare doesn't cover. In his opening cliff offer outlined this week, the president says he would save $400 billion over 10 years through changes to entitlements first outlined in his fiscal 2013 budget proposal (Reichard, 11/30).

The Denver Post: Fiscal Cliff: How Colorado Health Care Will Be Affected
The fiscal cliff is no ethereal metaphor in Colorado's health-care community -; it would be a calamity for thousands of health and medical jobs because of Medicare cuts, in one of the few industries that remained a bright spot in the recession. Other federal budget cuts required by the cliff's "sequestration" provisions could severely hamper such public-health efforts as vaccinations, food safety and doctor training (Booth, 11/30).