Mitch McConnell, the Senate Republican leader, says he “burst into laughter” Thursday when Treasury Secretary Tim Geithner outlined the administration proposal for averting the fiscal cliff. He wasn’t trying to embarrass Geithner, McConnell says, only responding candidly to his one-sided plan, explicit on tax increases, vague on spending cuts.
Geithner’s visit to his office left McConnell discouraged about reaching a “balanced” deal on tax hikes and spending reductions designed to prevent a shock to the economy in January. “Nothing good is happening” in the negotiations, McConnell says, because of Obama’s insistence on tax rate hikes for the wealthy but unwillingness to embrace serious spending cuts.
Geithner suggested $1.6 trillion in tax increases, McConnell says, but showed “minimal or no interest” in spending cuts. When congressional leaders went to the White House three days after the election, Obama talked of possible curbs on the explosive growth of food stamps and Social Security disability payments. But since Geithner didn’t mention them, those reductions appear to be off the table now, McConnell says.
Obama is pushing to raise the tax rates on couples earning more than $250,000 and individuals earning more than $200,000. But those wouldn’t produce revenues anywhere near $1.6 trillion over a decade.
The “guess” of those involved in the negotiations, Politico reported, is that a bipartisan deal “will include a rate hike, higher taxes on carried interest and probably capital gains and dividends, and either a cap on total deductions for rich people or some form of a minimum tax rate for them.”
House speaker John Boehner said today that nothing has been agreed to. “No substantive progress has been made.”
Besides raising taxes, Geithner was reported to have proposed a one-year delay in scheduled $1.2 trillion spending cuts to defense and domestic, and a $400 billion reduction in Medicare funding. The $1.2 trillion in cuts was mandated after Congress failed to reach an agreement in 2011 on reductions.
Obama has talked up what he calls a “balanced” approach to averting the fiscal cliff of tax hikes and spending cuts in January. But he’s offered few specifics on the spending side.