Obama, GOP to seek quick deal on tax cuts

McClatchy NewspapersNovember 30, 2010 

WASHINGTON — President Barack Obama and top Republican congressional leaders — who've had a rocky relationship for nearly two years — insisted Tuesday that they got the midterm election message from voters and began searching immediately for a way to extend Bush-era tax cuts.

The cuts expire on Dec. 31. Obama and Democratic congressional leaders want them extended only for individuals earning less than $200,000 a year and couples making less than $250,000 a year. Republicans want the breaks to continue for everyone.

Obama met for about two hours Tuesday with congressional leaders from both parties at the White House, the first time they've met since Republicans won control of the House of Representatives and gained six Senate seats on Nov. 2. The tax-cut extension issue dominated a discussion that also covered expiring unemployment benefits, nuclear arms control and gays in the military.

For the final 35 minutes of the meeting, Obama and congressional leaders asked their staffs to leave the room, a step meant to encourage candor.

The two sides emerged full of praise for each other and agreed to immediate Capitol Hill tax cut negotiations among Treasury Secretary Timothy Geithner, Budget Director Jacob Lew and four key members of Congress.

They also seemed ready to tone down the harsh rhetoric that's characterized White House-congressional relations since Obama became president 22 months ago.

The American people are "demanding cooperation and they're demanding progress," Obama said after the meeting. "And they'll hold all of us, and I mean all of us, accountable for it." He said he was "very encouraged by the fact that there was broad recognition of that fact in the room."

The next Speaker of the House, John Boehner, R-Ohio, struck a similar note, saying, "I am optimistic" about prospects for future cooperation. He said Obama acknowledged that "he hadn't spent as much time with us, reaching out and talking to us, and committed to do so."

Senate Majority Leader Harry Reid, D-Nev., concurred, calling the session "a very, very efficient, very, very productive meeting."

They were all heeding a strong message from the American public to work together and help revive the ailing economy.

Republicans insist that because of their success on Nov. 2, the public endorsed their view that all Bush-era cuts be extended, including for the wealthy. However, a McClatchy-Marist poll taken Nov. 15-18 showed that 51 percent want tax cuts extended only for those earning less than $250,000, while 45 percent wanted all the cuts extended. The poll had an error margin of plus or minus 3 percentage points.

Neither side has the votes to prevail in the current Congress, where Democrats control both houses but lack 60 Senate votes needed to cut off debate. If Congress doesn't act, income tax rates as well as taxes on capital gains and dividends would revert to Clinton-era levels effective Jan. 1.

According to White House spokesman Robert Gibbs, there was "strong agreement" at Tuesday's meeting that the cuts shouldn't be allowed to expire.

Tuesday's meeting included Geithner, Lew, Vice President Joe Biden, House Speaker Nancy Pelosi, D-Calif., Boehner, Senate Majority Leader Harry Reid, D-Nev., Senate Minority Leader Mitch McConnell, R-Ky., and other congressional leaders.

They agreed that tackling economic issues was their key priority, notably resolving the dispute over the expiring tax cuts and funding the government for the rest of the fiscal year, through Sept. 30, 2011. Government funding runs out Friday.

Many Republicans are pushing for a stopgap funding measure that will run out early next year, when the stronger GOP will have a better chance to impose the kinds of spending cuts it promised during the campaign.

House Republicans vowed in their "Pledge to America" to roll back spending to 2008-09 levels, saving about $100 billion in the first year. Last year's federal budget deficit was $1.29 trillion, and the nonpartisan Congressional Budget Office projects this year's figure will reach $1 trillion.

Republicans will have a strong House majority in the 112th Congress, which begins in early January. Democrats will hold on to a 53-47 majority in the Senate.

Until early January, though, Democrats still control 58 Senate seats and have a 255-179 majority in the House of Representatives. Their leaders are pushing hard for a budget that makes some trims but will last until the next fiscal year begins on Oct. 1.

Obama also pushed for December ratification of the New START treaty. "I reminded them that this treaty has been vetted for seven months now," he said, adding, "We need to get it done."

Conservative Republicans have been balking, and McConnell said after Tuesday's meeting that the treaty should be considered only after the tax cut and funding issues are resolved.

"The unanimous view of Senate Republicans is 'let's take care of the tax issue,'" he said. "Let's take care of how we're going to fund the government for the next 10 months. If there's time left for other matters, it will be up to the majority leader (Reid) to decide whether we turn to other things before we adjourn for the year."

Some Republicans suggested that the administration is hearing their concerns on the treaty and is making a strong effort to woo them.

"The administration position has continued to evolve in a very positive way," said Sen. Bob Corker, R-Tenn.

ON THE WEB:

Simpson-Bowles plan

Schakowsky proposal

Congressional Budget Office deficit projections

Treasury Department report on 2010 deficit

Party divisions in the House

Unofficial roster of 112th Congress House members

MORE FROM McCLATCHY:

Obama pay-freeze plan an opening move in a busy week

With Social Security proposal, deficit panel touches third rail

Liberals offer alternative deficit-reduction plan

For more McClatchy politics coverage visit Planet Washington

McClatchy’s probe into roots of financial crisis, a Pulitzer finalist

To ask a question about this story or any economic question, go to McClatchy's economy Q&A

McClatchy Washington Bureau is pleased to provide this opportunity to share information, experiences and observations about what's in the news. Some of the comments may be reprinted elsewhere in the site or in the newspaper. We encourage lively, open debate on the issues of the day, and ask that you refrain from profanity, hate speech, personal comments and remarks that are off point. Thank you for taking the time to offer your thoughts.

Commenting FAQs | Terms of Service