When he unveils the budget on Wednesday, Obama will break with the tradition of providing a sweeping vision of his ideal spending priorities, untethered from political realities. Instead, the document will incorporate the compromise offer Obama made to House Speaker John Boehner (R-Ohio) last December in the discussions over the so-called “fiscal cliff” - which included $1.8 in deficit reduction through spending cuts and tax increases.
“The president has made clear that he is willing to compromise and do tough things to reduce the deficit,” a senior administration official said, “but only in the context of a package like this one that has balance and includes revenues from the wealthiest Americans and that is designed to promote economic growth.”
While Republicans are certain to be skeptical of Obama’s call for more taxes, the president also is likely to face immediate heat over his budget proposal from some Democrats and liberal supporters. Obama proposes, for instance, to change the cost-of-living calculation for Social Security in a way that will reduce benefits for most beneficiaries, a key Republican request that he had earlier embraced only as part of a compromise. Many Democrats say they are opposed to any Social Security cuts and are likely to be furious that such cuts are now being proposed as official administration policy.
Conservative Republicans in the House are impeding legislative progress in Congress, and Republican Rep. Tom Cole is fed up.
“They think they’ve been elected to the House of Commons, where all power is concentrated in one chamber,” said Cole, an ally of House Speaker John Boehner, who has often found himself at odds with the most conservative members of the conference. “The speaker is not the prime minister,” and, Cole added, “just being able to get something through the House doesn’t mean much.”
In an interview with BuzzFeed, Cole recalled the drama preceding a fiscal cliff deal, when House Republicans scuttled Boehner’s own “Plan B” before it could come to a vote, an outcome widely interpreted as a sign of House leadership’s lack of control over the conference.
“You can’t get people who won’t vote for Boehner’s ‘Plan B,’ and then wonder why they end up with the fiscal cliff deal they do,” Cole said.
With no deal in place in Congress, $85 billion in sweeping federal spending cuts will take effect Friday, targeting everything, from defense to education.
There is little hope of a last-minute deal to stave off the automatic cuts after the Senate failed to strike a deal and a large number of the members of the House left Washington on Thursday for the weekend.
The pending budget cuts are the result of impasse along primarily party lines, whose origins stem from an August 2011 deal to increase the debt ceiling.
Expectations are low that a meeting Friday morning between President Barack Obama and congressional leaders will yield a solution.
The impact of forced budget cuts Budget cuts ignites political circus Budget cuts: Warnings or scare tactics? Small thinking about BIG problems
Most observers believe both sides will use the meeting at the White house to underline their positions heading into the next round of the budget wars — a possible government shutdown on March 27, when current federal funding authority expires.
The delusions of tea party Republicans are about to create a lot of misery for America. The “sequester” — the drastic set of budget cuts formerly known as the “fiscal cliff” — seems very likely to go into effect at the end of this week due in no small part to the fact that hyper-conservative lawmakers, such as Kentucky Sen. Rand Paul, actually think it’s a pretty swell idea.
Their obsessive and mistaken belief that the federal deficit is the greatest threat to the republic is leading them to block any compromise with Democrats that would delay or repeal the looming budget reductions.
They want government to get smaller and smaller, even if the cuts will come too quickly and slash too indiscriminately. The supreme absurdity of their position is that this could so damage the American economy that federal revenue will drop and deficit reduction will become even harder to achieve.
The tea party folks may be sincere, loyal citizens, but their notions about how the economy works are exactly that: mere notions. Their core notion is that government needs to do nothing more than get out of the way of business in order for the economy to boom and bloom.
In an 18th century world or in the fiction of Ayn Rand that might have worked, but the reality is different. The United States became the world’s biggest economy in the post-World War II years for many reasons, but one big reason is that government played a pivotal role.
Government built infrastructure like the interstate highway system, paid for crucial research and development, ran the space program, supported a massive military and played referee in the financial realm so that those who wanted to rig the system could not do it as easily as they had in the 1920s.
“If congressional Republicans refuse to pay America’s bills on time, Social Security checks and veterans’ benefits will be delayed. We might not be able to pay our troops, or honor our contracts with small business owners. Food inspectors, air traffic controllers, specialists who track down loose nuclear material wouldn’t get their paychecks,” he said.
Obama reminded Republicans that he won the November election partly on his approach to fiscal issues.
The debt limit is one of a trio of deadlines looming around the end of February, including automatic deep spending cuts that were temporarily put off in the “fiscal cliff” deal, and the end of a stopgap government funding measure.
A number of Republicans have said they would be willing to allow a U.S. debt default or a government shutdown to force the Obama administration to accept deeper spending cuts than the White House would like.
Obama’s unexpected news conference could have been a pre-emptive strike aimed at influencing strategy sessions among Republican lawmakers scheduled for later this week.
The Treasury Department warned on Monday that the United States will run out of ways to prevent a default in mid-February or early March if the $16.4 trillion ceiling on borrowing is not raised.
NOT A “DEADBEAT NATION”
Obama said he would agree to talk about steps to trim the U.S. budget deficit, but made clear he wants to keep that discussion separate from the debt ceiling increase.
“The issue here is whether or not America pays its bills,” he said. “We are not a deadbeat nation. And so there’s a very simple solution to this: Congress authorizes us to pay our bills.”
He held to his position that deficit reduction should include measures to raise revenue and not come from spending cuts alone.
After all the histrionics it’s now just another day in DC; here’s hoping that the 113th congress will be filled with a lot less drama and a lot more action.
President Barack Obama has signed into law a bill to avert the fiscal cliff, a day after the House and Senate approved the much-debated legislation.
Obama, who returned to his family vacation in Hawaii after Tuesday’s House vote, signed the bill via autopen on Wednesday.
But new battles over taxes and spending await Washington in the next few weeks.
Congress averted that self-built precipice late Tuesday when the House voted to stave off widespread tax increases and deep spending cuts by accepting a brokered Senate compromise. It makes permanent the Bush administration’s tax cuts for individuals earning less than $400,000 per year and couples earning less than $450,000.
Despite reaching a fiscal cliff deal that will shield 99 percent of Americans from an income tax increase, more than three quarters of American households will still face higher federal tax bills in 2013. That’s because legislators failed to renew a temporary reduction in payroll taxes, worth about $1,000 to a worker earning $50,000 a year.
But that’s not the only bad news for consumers’ pocketbooks. Regardless of the tax package Congress finally cobbled together Tuesday, a bevy of products Americans use every day are about to get pricier, according to experts.
[RELATED: Despite Deal, Most Americans Get Tax Hike]
Here’s a look at some items consumers will probably paying more for in 2013:
1. New cars: More stringent fuel-efficiency standards enacted by the Obama administration are making engines more expensive to produce, which in turn translates into costlier cars, according to consumer deals site Dealnews.
The sticker price on the Toyota Camry will go up $175 this year and the 2013 Lexus CT 200h will be almost $3,000 more expensive than last year’s model.
2. Groceries: Remember the drought this summer that scorched the nation’s farming regions? Thanks to the brutal dry spell, food prices are expected to rise as much as 4 percent in 2013, the United States Department of Agriculture says, which translates into an extra $40 a month in food costs according to some estimates.
[READ: Fiscal Cliff Bill Loaded With Pork]
A scarcity of corn caused livestock feed prices to spike, forcing farmers to cut back herd sizes to keep costs in check. With less supply of beef, poultry, and milk-producing cows, your next visit to the butcher’s counter and dairy cooler is likely to be a bit pricier.
Cereal and other bakery products will rise, too, according to experts. Lower wheat yields on account of the drought have crimped supply and driven prices up. The USDA expects prices for those items to creep up by as much as 3.5 percent in the coming year.
Two more good things about this:
the Hastert rule (a.k.a. majority of the majority rule) was tossed aside by the GOP to pass the bill, I think that’s a first for the 112th tea party congress & Wikipedia has already been updated.
The Obama middle class tax cuts and top earner tax increases are permanent, unlike the previous temporary Bush tax relief.
Republicans split the difference on dividend taxation, raising it to 20 percent too, rather than the 39.6 percent Obama wanted. The working class got an extension of the stimulus tax cuts, but lost out on an extension of the payroll tax holiday. The deal also includes a bunch of other miscellaneous provisions (Suzy Khimm has the details here), and the end result is a revenue increase of about $600 billion over ten years.
In bonus news, the milk cliff was also averted. At the last minute, the Senate added a nine-month extension of the current farm bill to the legislation. This means we won’t be reverting to the 1949 law, which would have doubled milk prices across the country. Lactophiles can now breathe as easily as millionaires in hospices.
But it’s not over til it’s over, and the fiscal cliff is far from over. First, the House still has to vote on the deal. They’ll probably approve it, though. [Late night update: They did.] More importantly, negotiators punted over the debt ceiling and the sequestration cuts. That’s the $1.2 trillion in automatic spending cuts that emerged from the 2011 debt deiling debacle, split evenly between domestic programs and defense programs. Congress now has two months to hammer out a deal on that front, and Obama held a press conference yesterday warning Republicans that he wouldn’t accept a deal that was all spending cuts and no revenue increases. If this sounds like the exact same thing they’ve been fighting over for the past year, give yourself an A.
The U.S. narrowly avoided going over the fiscal cliff early on New Year’s Day after a last-minute bipartisan agreement cleared the way for a middle-of-the-night vote in the Senate.
The interim deal would raise income taxes on single earners with annual incomes above $400,000 and married couples with incomes above $450,000. It would also block spending cuts for two months, extend unemployment benefits for the long-term jobless, prevent a 27 percent cut in fees for doctors who treat Medicare patients and prevent a spike in milk prices.
It now moves to the House, where Republicans were scheduled to meet at 1 p.m. ET. Republican leader Eric Cantor of Virginia told Reuters that it remained to be decided whether the House would vote on the plan.
The high-stakes drama was resolved after days of back and forth between Vice President Joe Biden, negotiating for Democrats, and Senate Republican leader Mitch McConnell of Kentucky, who finally came to an agreement late Monday.
Don’t be surprised at all if the GOP refuses to take this deal.