With less than two weeks left before we approach the edge of the ‘fiscal cliff’ and a series of tax hikes kick in on Jan. 1, we are seeing encouraging signs of pragmatism and negotiation from President Obama and House Speaker John Boehner.
On the president’s part, he has dropped his long-held insistence that taxes rise on individuals earning more than $200,000 and families making more than $250,000. Instead, he is offering a new threshold of $400,000 and lowering his 10-year tax revenue goals from the $1.6 trillion he had argued for a few weeks ago.
Boehner earlier had opened the door to a potential tax-rate increase at the upper end of the income scale.
Another encouraging note has been the dropoff — by both sides — in posturing and self-indulgent rhetoric and an uptick in private negotiation.
Obama and Boehner met privately at the White House on Monday and spoke again on the phone later that night. Boehner met with House GOP members on Capitol Hill Tuesday morning to go over the talks and Obama’s latest offer.
The basic high-profile issue is simple. If Congress fails to act, tax rates will increase on all income earners on Jan. 1. At the same time, a number of other domestic and military spending cutbacks will be activated and economists warn the cumulative effect could throw the U.S. into another recession.
Movement on the tax issue began after Boehner, who had opposed higher rates on any income earners, agreed on Friday to accept an increase in tax rates for taxpayers who earn more than $1 million. Boehner’s plan would raise about $1 trillion in taxes over 10 years.
Obama then abandoned his demand for permanent borrowing authority and, instead, is asking for a new debt limit that would last two years and put its renewal beyond the politics of a 2014 midterm election.
Obama also is proposing lower cost-of-living increases for Social Security beneficiaries and the use of an inflation index that would push more people into higher income tax brackets.
In making his offer, Obama ignored Republican demands to increase the eligibility age for Medicare from 65 to 67, a goal Democrats reject. He also sought to contain cuts in Medicare and other health care programs to about $400 billion over 10 years, less than what Republicans want.
And the president continues to ask for spending on unemployment assistance and on public works projects.
The key thing is — at this point — both sides seem to want to achieve a substantial agreement rather than just delay a fiscal day of reckoning.
With that in mind, it should be remembered a number of disputes remain to be settled.
To that end, Obama has conceded that a big bargain would require giving up some of his proposals.
“I understand that I don’t expect the Republicans simply to adopt my budget,” he said during his post-election news conference last month. “That’s not realistic. So, I recognize we’re going to have to compromise.”
A compromise, of course, requires concessions from both sides. The president and the speaker seem to be moving in that direction.
Keep going. You have 12 days.