Representative Henry Waxman speaks during a news conference
calling for no reduction in the Medicare and Medicaid
budgets, as part of the year end budget talks on Capitol
Hill. REUTERS/Joshua Roberts
US House of Representatives Speaker John Boehner offered
no concrete signs of progress today on "fiscal cliff" talks but
said he remained hopeful that both sides would reach an
agreement by the end-of-year deadline.
Amid signs the White House and Boehner's office are making
headway in the talks, Boehner repeated his now-familiar call
for President Barack Obama to offer a new proposal to avert
the automatic steep tax hikes and spending cuts set for the
end of the year unless Congress intervenes.
"I'm an optimist. I'm hopeful we can reach an agreement. This
is a serious issue and there is a lot at stake," Boehner said
on the House floor as he opened the day's legislative
The pace of staff-level talks has quickened since Boehner met
on Sunday with Obama at the White House. Boehner said, "It
was a nice meeting, it was cordial," but Republicans still
needed to see more specific spending cuts from the president.
The two major elements of the fiscal cliff are broad spending
reductions starting Jan. 1 and tax cuts that expire at the
end of the year. Economists have warned the fragile economy
could slip back into recession without a deal.
Obama and Boehner have exchanged opening proposals aimed at
cutting deficits by more than $4 trillion over the next 10
years, but Republicans have repeatedly called for Obama to
submit more spending cuts before talks can make progress.
"Where are the president's spending cuts? The longer the
White House slow-walks this process the closer our economy
gets to the fiscal cliff," Boehner said.
The biggest immediate conflict is over Obama's demand that
tax rates rise for the wealthiest 2 percent of Americans.
Republicans want existing lower rates continued for all
brackets and prefer to raise more revenue by eliminating tax
loopholes and reducing deductions.
Republicans also want deeper spending cuts than those sought
by Obama and fellow Democrats, particularly on social
entitlement programs like the government-funded Medicare and
Medicaid healthcare plans.
Representative Chris Van Hollen, the top Democrat on the
House Budget Committee, told MSNBC on Monday that Congress
could resolve some of the issues by the December 31 deadline
- among them the hikes in tax rates - but might have to leave
others for the new Congress that takes office in January.
While senior figures from both parties caution that they are
far from a deal, a softening of partisan rhetoric in recent
days and the increased frequency of talks has created
speculation that negotiations may be going well.
Complicating the talks is the looming need for an increase in
U.S. borrowing authority that Obama wants before Congress
wraps up for the year. Without the authority, the government
will hit its $16.4 trillion borrowing limit by year's end and
run out of steps to stave off default by mid-February.
Obama has asked for the power to raise U.S. borrowing
authority without legislation from Congress in hopes of
avoiding another confrontation with Republicans like the 2011
showdown that led to an embarrassing downgrade of the U.S.
Also in the mix is a payroll tax "holiday" set to expire,
which, if not extended, will quickly reduce the take-home pay
of a large segment of the U.S. workforce.
The holiday, now in its second year, has been providing
workers with an average of about $1,000 a year in extra cash.
Significant divisions remain on the payroll tax question in
part because it funds the Social Security retirement program.
The payroll tax is paid by employers and employees each at a
rate of 6.2 percent of wages, up to a maximum of $110,110.
The holiday, enacted in 2010, reduced the rate by 2
percentage points on the portion paid by the worker.
Van Hollen said Republicans were coming around on the
tax-rate hikes on the wealthiest Americans and there was a
good chance of resolving that soon. But the other things
might have to wait, he said, mentioning the budget cuts and
the payroll tax.
If not complete by Jan. 1, he said, "my belief is you would
get it done very soon" after the New Year, noting that the
government has some flexibility on withholding taxes that
could limit the immediate hit to taxpayers while negotiations
continued into 2013.
There were no travel plans Tuesday on Obama's public
schedule, which observers on Capitol Hill hoped signaled more
The lack of demonstrable progress has kept investors from
making aggressive bets in recent weeks.
But stocks have steadily marched higher on thin volume. The
S&P 500 surpassed 1,433.38 on Tuesday, retracing losses
in the first seven sessions after Obama's re-election.
"I guess in our own dysfunctional way, there is progress,"
said Frank Davis, director of sales and trading at LEK
Securities in New York.
"Since conversations are occurring, it clarifies at least
they are taking some action. My personal gut is they'll
jostle this into the holiday week and try to do a last-minute