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Obama Rejects Future Debt Ceiling Limits as Fiscal Cliff Negotiation Point

December 5, 2012 at 12:00 AM EDT
Reports of Republicans considering a tax rate hike in exchange for spending cuts next year prompted President Obama to reject linking the fiscal cliff to future debt ceiling limits. Judy Woodruff talks to Sen. Bob Corker, R-Tenn., who is optimistic for positive progress and hopes shared by all parties for a responsible outcome.
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GWEN IFILL: Lawmakers stepped up the rhetoric, but grew no closer today to agreement on how to avoid slipping over that so-called fiscal cliff. But each side demanded the other compromise.

NewsHour congressional correspondent Kwame Holman begins our coverage.

PRESIDENT BARACK OBAMA: I have to just tell you that is a — that is a bad strategy for America. It’s a bad strategy for your businesses, and it is not a game that I will play.

KWAME HOLMAN: President Obama today, in Washington, assured business executives he will reject attempts to link the fiscal cliff budget negotiations to future increases in the nation’s debt ceiling.

The New York Times reported Republicans might accept higher tax rates on wealthier Americans to avoid triggering tax hikes for everyone. In return, they’d demand greater spending cuts next year before raising the federal borrowing limit.

BARACK OBAMA: If Congress in any way suggests that they’re going to tie negotiations to debt ceiling votes, and take us to the brink of default once again as part of a budget negotiation, which, by the way, we have never done in our history, until we did it last year, I will not play that game, because we have got to break that habit before it starts.

KWAME HOLMAN: The 2011 standoff between the president and Republicans led the nation to the brink of national default. Standard and Poor’s even lowered its rating on U.S. government bonds. Now the president has proposed he be given authority to raise the debt ceiling without congressional action.

House Republicans reject that idea. And they have called for raising revenue without rate hikes, plus major savings in entitlement programs. The president argued today a partial deal is possible on taxes if the GOP will agree to raise rates on the top 2 percent.

BARACK OBAMA: If we can get the leadership on the Republican side to take that framework, to acknowledge that reality, then the numbers actually aren’t that far apart. Another way of putting this is, we can probably solve this in about a week.

KWAME HOLMAN: Despite issuing a warning to congressional Republicans, the president also expressed optimism that some GOP lawmakers may be warming to the idea of allowing taxes on the wealthy to rise. But here at the Capitol today, congressional Republican leaders said the president should focus less on tax increases and more on spending cuts.

REP. ERIC CANTOR, R-Va.: We put an offer on the table now. He has out of hand rejected that. Where are the specifics? Where are the discussions? Nothing is going on. Meanwhile, the people of this country are the ones that suffer.

KWAME HOLMAN: House Majority Leader Eric Cantor claimed negotiations are deadlocked and the president isn’t engaged.

ERIC CANTOR: We have not had any discussion on any specifics with this president about the real problem, which is spending. We have got to do something about the spending.

An obsession to raise taxes is not going to solve the problem. What will solve the problem is doing something about the entitlements, taking on the wasteful spending in Washington.

KWAME HOLMAN: Still, Republican Sen. Tom Coburn of Oklahoma told MSNBC the emphasis on a short-term solution ignores the country’s larger financial problems.

SEN. TOM COBURN, R-Okla.: Personally, I know we have to raise revenue. I don’t really care which way we do it. Actually, I would rather see the rates go up than do it the other way, because it gives us a greater chance to reform the tax code and broaden the base in the future.

KWAME HOLMAN: And in a Web video, former Republican senator Alan Simpson made a lighthearted attempt to get younger Americans interested in lowering the national debt.

ALAN SIMPSON, National Commission on Fiscal Responsibility And Reform: Take part or get taken apart. Boy, these old coots will clean out the treasury before you get there.

KWAME HOLMAN: For now, though, official Washington enters another weekend in stalemate with across-the-board tax hikes and huge spending cuts looming at year’s end.

White House officials said today the Office of Management and Budget has asked federal agencies for contingency plans in case there’s no deal and the spending cuts start to take effect come January.

JUDY WOODRUFF: We continue our series of conversations on this hotly debated topic.

Earlier this week, we heard from Erskine Bowles and Paul Krugman.

Tonight, we hear from a Senate Republican who has proposed his own plan to dodge the fiscal cliff.

It includes limiting tax deductions, but no increase in marginal tax rates. And it would change eligibility for Medicare and Social Security over the longer term.

Bob Corker is from Tennessee. And he joins us now from Capitol Hill.

Senator, welcome.

And, first of all, we heard late today that there was a phone conversation between the president and Speaker Boehner. Have you heard anything about that?

SEN. BOB CORKER, R-Tenn.: No, I haven’t.

I have been in multiple conversations today about this. But I have been in a meeting until right now for the last two hours. So I have not been aware of the phone conversation.

JUDY WOODRUFF: Well, we are not hearing any reports, other than the fact that the call took place, but the fact that it took place, is that good news?

BOB CORKER: Oh, I don’t know, Judy.

I think there are a the love discussions about what is the best way to actually get the kind of entitlement reforms that everyone knows need to take place, both Republicans and Democrats.

Judy, I have been in I don’t know how many meetings over the last two years where there is a lot of commonality around the issue.

As you know, the president has been, you know, sort of a — not to be pejorative, but sort of a one-trick pony on this tax rate increase issue. And what that’s doing is putting all the focus on revenues.

And, no doubt, the American people are concerned about maybe being hostages, if you will, with tax increase at the end of the year. So there are a lot of discussions about the real and best ways to actually cause these reforms to take place, again, reforms that both Democrats and Republicans acknowledge, but the president has not yet put on the table.

So, we will see. I don’t think, for what it’s worth, for those of you, those people who listen in on your program, I do not think we are going to get to a situation at year end where, you know, Armageddon occurs. I do think the debt ceiling in an important debt — date. And even thought…

JUDY WOODRUFF: Well…

BOB CORKER: Go ahead. I will let you talk.

JUDY WOODRUFF: Yes. And I want to ask you about that.

BOB CORKER: OK.

JUDY WOODRUFF: And I do want to ask you about entitlements.

But, first off, you were quoted on Reuters today as saying you were hearing whispers over on the House side of the Capitol of maybe some movement on tax rates.

Do you think there is some movement in that direction among Republicans in the House?

BOB CORKER: Well, I just think there’s a discussion.

There’s a discussion about what is the best way to get the outcome?

The outcome we want, Judy, is an outcome where we save our nation, where we come up with at least $4.5 trillion in savings. And we understand the mix is going to include revenues. I laid out a bill — most people don’t do that, Judy — that laid out specifics.

And it was a $4.5 trillion package that really moved our country towards solvency. So, there are discussions. Does it make sense to continue on the rate issue, or is it better to turn the focus some other place? So, there are a lot of discussions.

And I think, by the way, this has been the healthiest day that I can remember regarding moving towards a place that I think gets us the right kind of outcome that the nation needs at this point.

JUDY WOODRUFF: So, I hear you saying that there’s more movement in the direction of what the president wants on raising tax rates for those — for that income over $250,000 a year than what is being said publicly.

BOB CORKER: Well, let me just — let me make it slightly broader.

There’s movement in a lot of directions.

And I do think that Republicans are beginning to be aware that the president — and, again, I’m not trying to be pejorative — but the president is really not laying out anything specific on entitlements.

And so I do think Republicans are looking at, look, we’d like to solve our nation’s problem.

What is the best way to get us in a place where we actually have the leverage — which, unfortunately, it takes — the leverage to get us where we need to go as a country?

And, so, look, there are a lot of healthy discussions that are taking place. And I do think, again, from my standpoint, someone who really cares about this issue, cares about the economic growth that would ensue Jan. 1 or whenever we put this in the rear-view mirror. If we would do that, the country would just take off economically.

And I think today, from my standpoint, has been the very best day since we have returned from recess.

JUDY WOODRUFF: So, again, what I’m hearing you saying is, if there’s movement in that direction, it sounds like you’re saying at least there’s conversation about it, then that would open the door to some work on entitlement.

Now, the White House would say the president has already given some on entitlements, Medicare, as part of his health care reform.

BOB CORKER: Yes.

JUDY WOODRUFF: And so — but do you see the coming together, the makings of an agreement there?

BOB CORKER: I don’t. And — I don’t.

And I think that’s where all of us who really want to see these programs stay solvent, we want them to be there for seniors down the road. We want to save our nation’s solvency. I think that there’s a lot of thinking about the best way to actually cause the president to actually come forth with a real plan. And that’s not the case now. And it just isn’t.

So, look, as you know, Judy, I have outlined a very detailed bill that I think most of which at some point in time is going to become law.

And the longer we put this off, the deeper the hole gets. And so we’re trying to focus on, how do we get this done now?

JUDY WOODRUFF: Well, let me ask you about part of your plan…

BOB CORKER: OK. OK.

JUDY WOODRUFF: … because part of it would what is called means-test Social Security, Medicare benefits.

BOB CORKER: Right.

JUDY WOODRUFF: In other words, the benefits would go down for those at the higher income levels.

BOB CORKER: Right.

JUDY WOODRUFF: We had the economist Paul Krugman on the NewsHour last night, who said that, you know, not only do the polls show that many American are still opposed to this, but he said the benefit you get, the money that would be raised from doing that is really not enough to overcome the pain that he said it would cause lower- and middle-income Americans.

BOB CORKER: Well, first of all, it would cause no pain to lower- and middle-income citizens, because they wouldn’t be affected.

And I agree it’s only one of the things that needs to occur. It’s a small part. There are many more transformative things that need to happen in Social Security and Medicare. And my bill outlines those transformative things that really make them solvent for the long term.

There’s a $27 trillion unfunded liability there. But let’s go to me. Why in the world would American citizens subsidize my Medicare? I have been very successful in business. I have been very fortunate to be in a country that allows that to occur.

I’m in an income category where it’s perfectly ridiculous for the American citizens to subsidize my Medicare. And I think most people in my category would absolutely agree that that’s the case.

So I understand what he’s saying, but it makes no sense to me because it has zero effect on low- and middle-income citizens because they wouldn’t be means-tested.

JUDY WOODRUFF: And just, finally, Senator, a question very quickly on the debt ceiling. The president made it very clear today that he thinks there’s no justification for continuing to have these debt ceiling votes connected to the discussions about taxes and entitlement.

BOB CORKER: Yes. Yes. I heard that. And I know he had a different position when he was in the Senate.

But if you look back historically, Judy, those are the points in time when you have been able to deal with some of the deficit issues. And, by the way, government is only funded through March anyway. So regardless of the debt ceiling, there’s still the issue of the fact that we have — we have only funded government through March.

So, there are actually two points. There’s the funding of government and there’s the debt ceiling. And I would agree with you that it’s unfortunate that a leverage point like that has to be used. We ought to just sit down and solve this problem.

But, as we have seen, it’s the only thing thus far that has really produced the kind of results — we got the Budget Control Act last time — really take our nation towards solvency. So, I would agree with you. I wish we could just sit down and resolve it.

I think there is a majority of Republicans and Democrats in the House and Senate that want to do that. But the only two negotiators that matter right now are the president and Speaker Boehner. And, as I mentioned before, again, I understand there’s two sides of this tale.

The president really is not yet offering the kind of reforms that would make these programs solvent for the long haul. And so we’re trying to think, how do we get there? And so very healthy discussion today. I’m enthused about today. And I hope we will resolve this over the course of the next several weeks.

JUDY WOODRUFF: Sen. Bob Corker, thank you very much.

BOB CORKER: Thank you.

JUDY WOODRUFF: And we will have more perspectives in the coming days.