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Republicans Unhappy With Latest Fiscal Cliff Talks

Treasury Secretary Timothy Geithner; photo by Benjamin Myers/Reuters

Treasury Secretary Timothy Geithner arrives at the Capitol on Thursday for meetings on the fiscal cliff. Photo by Benjamin Myers/Reuters.

The Morning Line

Treasury Secretary Timothy Geithner delivered President Obama’s opening bid in the fiscal cliff negotiations to congressional leaders on Thursday, a proposal that includes $1.6 trillion in new taxes over the next decade, $50 billion in fresh stimulus spending and $400 billion in savings from federal health entitlement programs.

Republican leaders quickly dismissed the offer and called on the White House to put forward an agreement with specific spending cuts.

House Speaker John Boehner, R-Ohio, told reporters at a Capitol Hill news conference that “no substantive progress” had been achieved in talks between the White House and the Hill over the past two weeks.

“Listen, this is not a game. Jobs are on the line. The American economy is on the line. And this is a moment for adult leadership,” Boehner said.

The speaker and the president had a nearly 30-minute phone call on Wednesday evening, a conversation both sides described as “frank and direct.”

Senate Minority Leader Mitch McConnell, R-Ky., issued a statement after meeting with Geithner, saying the administration “took a step backward” with its offer, “moving away from consensus and significantly closer to the cliff.”

The Weekly Standard’s Fred Barnes reports that McConnell “burst into laughter” Thursday when presented with the framework for a deal.

In a statement, White House spokeswoman Amy Brundage said, “Right now, the only thing preventing us from reaching a deal that averts the fiscal cliff and avoids a tax hike on 98 percent of Americans is the refusal of congressional Republicans to ask the very wealthiest individuals to pay higher tax rates.”

Democratic Sen. Charles Schumer of New York charged that House Republicans must now come up with a plan of their own to address the fiscal cliff.

“If House Republicans consider the president’s budget a ‘new’ offer, then we await their counter-offer,” Schumer said in a statement. “The ball is now in their court to state what they would do on entitlements and taxes. They have given no specifics so far.”

Jonathan Weisman of the New York Times writes up the specifics of what Mr. Obama’s proposal would do with tax rates.

[T]he details show how far the president is ready to push House Republicans. The upfront tax increases in the proposal go beyond what Senate Democrats were able to pass earlier this year. Tax rates would go up for higher-income earners, as in the Senate bill, but Mr. Obama wants their dividends to be taxed as ordinary income, something the Senate did not approve. He also wants the estate tax to be levied at 45 percent on inheritances over $3.5 million, a step several Democratic senators balked at. The Senate bill made no changes to the estate tax, which currently taxes inheritances over $5 million at 35 percent. On Jan. 1, the estate tax is scheduled to rise to 55 percent beginning with inheritances exceeding $1 million.

Administration negotiators also want the initial stage to include an extension of the payroll tax cut or an equivalent policy aimed at working-class families, an extension of a business tax credit for investments, and the extension of a number of other expiring business tax credits, like the one on research and development.

The Washington Post’s Lori Montgomery and Paul Kane look at perhaps the most surprising demand in Mr. Obama’s proposal — that Congress essentially relinquish its authority to raise the country’s borrowing limit:

Although the White House offer seemed to startle Republicans, it contains little that would be unfamiliar to anyone following the president’s recent public statements. The exception was his proposal on the federal debt limit. GOP aides said Obama is seeking to permanently enact procedures that were temporarily adopted in the summer of 2011 that allow the White House to unilaterally increase the debt ceiling unless two-thirds of lawmakers disapprove.

That process, initially proposed by McConnell, was not intended to become permanent. By trying to make it so, Obama is seeking to avoid another damaging battle over the debt ceiling that would again risk a national default. However, this change would also deprive Congress of its historic authority over federal borrowing.

Mr. Obama will hit the road Friday in support of his approach for addressing the fiscal cliff, visiting a toy company outside Philadelphia, where he will surely hope for a better reception to his plan than it received from Capitol Hill Republicans on Thursday.


The next Congress should say goodbye to gridlock, newly elected Republican Sen. Jeff Flake (who is currently serving in the House) suggested in an interview on Thursday’s NewsHour. A solution to austerity measures will require support from both parties, he said, and that could lead to progress on other initiatives.

On immigration, Flake could be one of the senators to find compromise.

The issue is of particular importance to Flake’s home state of Arizona. Flake said he hopes the next session will pick up on the ideas in a bill called the Achieve Act, proposed recently in the Senate by outgoing members Kay Bailey Hutchison of Texas and Jon Kyl, whose seat Flake will fill. The bill is a take on the Dream Act concept and would create a legal route to permanent residency for young undocemented people who grew up in the United States.

“That gives us a point of departure, where to start from, and there will be reaction to that as we go into the New Year,” Flake said. “And we can either introduce that same thing or something like it. What we have right now with President Obama’s action is a temporary measure. We need something permanent. And this has always been an issue that we have needed to deal with in a humane, rational way.”

Flake’s known as a social conservative in many ways. But on immigration, he took a more moderate approach than many in his party during his six terms in Congress. Only during his closely fought campaigns for Kyl’s seat this fall did he move to the right, calling for strengthened borders as the first step toward reform.

Watch Flake’s interview with Ray Suarez here or below:


  • Friday’s tidbit from NewsHour partner Face the Facts USA shows that since the recession, Americans pay fewer taxes on investments.

  • Vice President Biden went to Costco…in search of pie. The Huffington Post has the slide show and why the veep may have chosen this store on its opening day.

  • The New York Times digs deep into the numbers and finds that Americans’ tax burdens have lightened in the past 30 years.

  • Republicans’ attention has turned to Sen. John Kerry as a candidate for the secretary of state job, despite the buzz, both good and bad, for Ambassador Susan Rice.

  • Politico’s Dave Levinthal and Anna Palmer look at what some of the lawmakers who won’t be returning to Congress will be doing next and find that K Street is a popular destination.

  • The New Republic unearths details of the internal polls the Romney campaign used to judge its candidate as winning on Election Day.

  • David Catanese of Politico reports that Texas GOP Sen.-elect Ted Cruz delivered a speech in Washington on Thursday night that stoked speculation about a potential White House bid in 2016.

  • The U.S. Department of Justice is spearheading a lawsuit against Gallup, the polling organization, for inflating its hours and prices when it billed two federal departments.

  • Mr. Obama hosted Romney for lunch at the White House. They talked about “America’s leadership in the world” and had white turkey chili and Southwestern grilled chicken salad.

  • The Atlantic writes about possible secret diplomatic missions that the U.S. has taken to North Korea.

  • The United Nations voted to recognize the state of Palestine on Thursday, and strong objections came from U.S. leaders, including Ambassador Rice.

  • First dog Bo Obama inspects the White House Christmas decorations in this video.


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