The Obama administration and House Republicans were at loggerheads Thursday in fiscal cliff talks, as the White House reportedly called for $1.6 trillion in new tax revenue and an unlimited debt ceiling on the table, as House Speaker John Boehner said there has been “no substantive progress” in negotiations.
Boehner’s Thursday morning comments, made after he met with Treasury Secretary Timothy Geithner, briefly rattled U.S. equity markets. But markets finished the day higher, with the Dow Jones Industrial Average DJIA +0.28% up 37 points and the S&P 500 SPX +0.43% index gaining 6 points. Read more about U.S. stocks in Market Snapshot.
Late Thursday, The Wall Street Journal, citing House Republican aides, said the White House’s opening bid in the talks included $1.6 trillion in tax revenue as well as a “permanent” increase in the U.S. debt ceiling. The administration also wants at least $50 billion in new spending to spur the economy, the aides told the Journal. Read more.
Boehner called on Democrats to “get serious” about spending cuts if they want a deal to avoid the automatic spending cuts and tax increases set to begin Jan. 1.
For their part, Democrats on Thursday kept up the sniping over getting to a cliff deal. Senate Democratic Leader Harry Reid insisted on raising top income-tax rates and said that raising the U.S. debt ceiling must be part of an agreement. Boehner said there would be a “price tag” for raising the debt limit — a comment White House spokesman Jay Carney called “deeply irresponsible.”
Democrats are waiting for a “serious” offer from Republicans, Reid added.
Boehner pointedly said he is not walking away from discussions about the fiscal cliff. He told reporters that his meeting with Geithner was “frank and direct.”
Geithner offered some spending cuts in programs such as farm-price supports, but didn’t specify a number, the New York Times reported.
President Obama also wants to tax dividends as income and is seeking a 45% estate tax on inheritances over $3.5 million, the Times reported.
Underneath the public rhetoric, meanwhile, the shape of a deal appears to be emerging. Politico reported Thursday that taxes will go up by just below $1.2 trillion; entitlement programs will be slashed by at least $400 billion; and there will be at least $1.2 trillion in spending cuts — the same amount as the automatic cuts set to begin on Jan. 1 if Congress doesn’t act.
“All you have to do is just listen to what’s happening out there, and you realize there is progress,” said Sen. Chuck Schumer, a New York Democrat.
Geithner met with the Republican and Democratic leaders of the House and Senate to present the administration’s case for avoiding the fiscal cliff.
On the Senate floor earlier Thursday, Reid stuck firm to Democrats’ insistence on extending middle-class tax cuts, only to be rebuffed by his Republican counterpart, Mitch McConnell.
McConnell suggested capping tax deductions to raise revenue, instead of raising income-tax rates.
The debt ceiling is likely to be reached in the early part of 2013 without an agreement to raise it. Carney said it should be should be raised without any drama in Washington. “Asking that a political price be paid for Congress to do its job to ensure that the United States of America pays its bills and does not default for the first time in history is deeply irresponsible,” he added.
Via – MarketWatch
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