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Obama, Boehner Resume Fiscal Talks With Phone Call

President Obama addressed business leaders during a meeting at the headquarters of the Business Roundtable on December 5. Photo by Kevin Dietsch/Getty Images.

The Morning Line

With both of their opening bids essentially pronounced dead on arrival, President Obama and House Speaker John Boehner resumed direct talks Wednesday, speaking by phone for the first time in a week as the two leaders attempt to broker an agreement to avert the so-called fiscal cliff.

The conversation came on a day when both men delivered public statements that gave the impression that little progress had been achieved in breaking the stalemate that had formed in the weeks since their first (and only) round of face-to-face talks in mid-November.

The president, addressing a group of business leaders in Washington, remained firm on his insistence that tax rates on the top 2 percent of wage earners would have to be increased for a deal to get done.

“We’re not insisting on rates just out of spite or out of any kind of partisan bickering, but rather because we need to raise a certain amount of revenue,” the president said.

Mr. Obama added: “We can probably solve this in about a week; it’s not that tough. But we need that conceptual breakthrough that says we need to do a balanced plan; that’s what’s best for the economy; that’s what the American people voted for; that’s how we’re going to get it done.”

Later on Wednesday, Treasury Secretary Timothy Geithner told CNBC that the administration “absolutely” was prepared to allow the country to go over the cliff on Jan. 1 if Republicans refused to back off from their opposition to raising rates on wealthier Americans.

At a Capitol Hill news conference with members of the House GOP leadership, Boehner said the revenue increases they had proposed would impact the same group of people.

“The revenues we’re putting on the table are going to come from, guess who? The rich,” the speaker said. “There are ways to limit deductions, close loopholes and have the same people pay more — more of their money to the federal government without raising tax rates, which we believe will harm our economy.”

On the Senate side, however, some Republicans were making noises about agreeing to rate increases, including Oklahoma’s Tom Coburn.

“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,” Coburn told MSNBC.

And Maine Republican Susan Collins announced her support for an idea floated by Rep. Tom Cole, R-Okla., last week to extend the tax breaks for families making less than $250,000 annually and address the cuts for the wealthy next year. In a statement, Collins said the approach “has merit because everyone agrees lower and middle-income families should not be subjected to higher taxes.”

On Wednesday’s NewsHour, Sen. Bob Corker, R-Tenn., told Judy Woodruff that he thought lawmakers were making healthy progress toward an agreement.

[T]here 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.

You can watch Judy’s full interview with Corker here or below:

Corker also said it was “unfortunate” that the country’s borrowing limit had become a “leverage point” in deficit reduction talks.

“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,” Corker said.

The president told business leaders that he would not engage in a debt ceiling fight with Republicans like the one that occurred in August of 2011.

“That is a bad strategy for America. It is a bad strategy for our businesses. And it is not a game that I will play,” Mr. Obama said.

But the Washington Post’s Lori Montgomery and Rosalind Helderman report that it still remains an option that GOP leaders are considering:

Another possibility would be to give in now on tax rates for the wealthy and tackle Social Security and Medicare early next year, when Obama will need Congress to raise the $16.4 trillion limit on federal borrowing. That could blunt the worst economic effects of the fiscal cliff and push off the fight over spending to a moment when many Republicans think they would have additional leverage.

But there are problems with that strategy, too. Many Republicans say they are willing to vote for higher tax rates only as part of a big debt-reduction deal. So, in the absence of such a deal, top GOP aides have been looking for a way to make Democrats bear the political burden of raising taxes on the rich.

It could work like this: The Republican-controlled House could adopt two competing bills. One, supported primarily by Republicans, would extend the expiring low tax rates for all households, including the rich. The second, supported primarily by Democrats, would extend the current low rates only on income less than $250,000 a year, allowing rates for the wealthy to increase. Both measures would go to the Democratic-controlled Senate, which would then pass only the Democratic bill.


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