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'Cliff' Talks at Standstill: 'It's Getting Worse, Not Better'

Wednesday, 12 Dec 2012 | 1:28 PM ET
House Minority Leader Eric Cantor, R-Va., speaks at a news conference in the Capitol after a meeting of the House Republican Conference.
Tom Williams | CQ Roll CAll | Getty Images
House Minority Leader Eric Cantor, R-Va., speaks at a news conference in the Capitol after a meeting of the House Republican Conference.

Talks to avoid the "fiscal cliff" showed little progress on Wednesday, with Republicans publicly rebuking the Obama administration and one House member saying "it's getting worse, not better."

At a morning briefing, House Majority Leader Eric Cantor lashed out at President Barack Obama, saying "let's stop playing games" and present a proposal to cut entitlement spending. But House Democratic leader Nancy Pelosi warned Republicans against raising the Medicare eligibility age to 67. "Don't go there," she said.

"We ask the president to please sit down with us and be specific and let's get that balanced plan" of revenue increases and spending cuts, Cantor said. "There's an inconsistency here and let's stop playing games."

Cantor made his statement in an appearance with Republican House Speaker John Boehner, who also accused Obama of not presenting a plan to cut spending. "Frankly that's why we don't have a plan today" to solve the "fiscal cliff."

Their statements came as the clock ticked toward the end-of-year deadline to avoid the automatic spending cuts and tax increases that could throw the economy back into recession. (Read More: 'Cliff' Plans Exchanged; Reid: Deal Unlikely by Christmas!)

Despite the stalemate, stocks rose. (Read More: Stocks Rise After Fed Decision, Led by Banks),

Two Wall Street titans, meanwhile, urged Washington to settle their differences. "Let's just do it," JPMorgan Chase CEO Jamie Dimon said. (Read More: 'Let's Just Do It,' Dimon Says of Avoiding 'Cliff'). And Goldman Sachs CEO Lloyd Blankfein said he was optimistic a deal would be reached.

Higher taxes are a medicine we can't turn away," he said. Both CEOS made their comments at the New York Times DealBook conference. (Read More: Investors Face 'Big Risk' With Rates: Blankfein.)

(Read More: Wall Street Worries Washington Will Wreck Economy: CNBC Survey.)

Boehner and Obama spoke on the phone Tuesday, a day after the president offered to reduce his initial demand for $1.6 trillion in higher tax revenue over a decade to $1.4 trillion. But Obama continued to insist that much of the revenue come from raising top tax rates on the wealthy. Boehner countered with another offer that aides to the Ohio Republican said stuck close to a document delivered to the White House a week ago. A top White House aide, Rob Nabors, came to the Capitol to respond.

A Democratic official said Boehner's counteroffer included permanent extension of all Bush-era tax rates for all taxpayers, including the top 2 percent of earners, the same as his earlier proposal.

"The president and I had a deliberate call yesterday and we spoke openly about the differences we face," Boehner told reporters Wednesday. "The president has called for $1.4 trillion dollars in revenue, that cannot pass the House or the Senate."

Boehner added: "I was born with a glass half full. I remain the most optimistic person in this town, but we got some serious differences."

He told the House GOP Conference not to make any serious plans around or after Christmas.

Leading lawmakers expressed pessimism that a deal was close, despite increasing angst about a Dec. 31 deadline to stop the expiration of Bush-era tax cuts and separate across-the-board spending cuts that are the result of Washington's failure to complete a deficit-reduction deal last year.

"I think it's getting worse, not better," House GOP Whip Kevin McCarthy, R-Calif., said.

Dimon Speaks Out on 'Fiscal Cliff'
CNBC's Kayla Tausche reports on what Goldman Sachs CEO Jamie Dimon had on his mind when he spoke at the Dealbook conference in New York City earlier today.

The Boehner camp again said it's up to the White House to proffer additional spending cuts to programs like Medicare. The White House countered that Republicans still need to cave on raising tax rates for the rich.

"Where are the president's spending cuts?" Boehner said on the House floor. "The longer the White House slow-walks this process, the closer our economy gets to the fiscal cliff."

In rebuttal, the White House swiftly detailed numerous proposals Obama has made to cut spending, including recommendations to cull $340 billion from Medicare over a decade and an additional $250 billion from other government benefit programs.

Obama remains determined that tax rates rise on family income exceeding $250,000, a move Republicans say would strike many small businesses that are engines of new jobs and file as individuals when paying their taxes.

House Minority Leader Nancy Pelosi said Wednesday that a bipartisan deal to avert a "fiscal cliff" is more likely if Democrats and Republicans don't try to over-reach on spending cuts.


Blankfein: White House Marketing Their Position
"For this deal to get done, you're going to have a coalition of moderates from both parties; the extreme of both parties are not going to throw in with this," said Goldman Sachs CEO Lloyd Blankfein, discussing how a deal will likely be worked out on the "fiscal cliff."

She warned Republicans against insisting on raising the Medicare eligibility age as part of any deal. "One of the things that we object to is raising the Medicare age," Pelosi said on "CBS This Morning." "Don't go there."

She said raising the retirement age wouldn't contribute much savings toward an agreement, adding: "Is it just a trophy that the Republicans want to take home?"

Raising the Medicare age from 65 to 67 could cut Medicare costs by $162 billion over a decade, according to a Congressional Budget Office estimate last year. But by 2035, it would cut Medicare's projected budget by 7 percent.

Democrats also pushed back against a GOP plan to reduce Social Security cost of living allowances. That's a step back from talks between Obama and Boehner 18 months ago in which Obama considered the lower COLA.

"Quite frankly, Social Security is off the table," said Rep. Joe Crowley, D-N.Y.

(Read More: Taxes Must Rise if Entitlements Go Unchecked: Hubbard.)


Two weeks before the year-end holidays, time to find agreement was short, but not prohibitively so.

"I think it's going to be extremely difficult to get it done before Christmas, but it could be done," Senate Majority Leader Harry Reid, D-Nev., said.

Boehner's office took the step -- unusual in secretive talks -- of announcing that Republicans "sent the White House a counteroffer that would achieve tax and entitlement reform to solve our looming debt crisis and create more American jobs."


'Fiscal Cliff': 'Very Likely Deal Will Be Reached'
David Rubenstein, co-founder & managing director, The Carlyle Group, explains why he is optimistic a "fiscal cliff" deal will be reached and what he is hearing from global leaders outside the United States.

Democrats have watched with satisfaction in recent days as Republicans struggle with Obama's demands to raise taxes, but Reid privately has told his rank and file they could soon be feeling the same distress if discussions grow serious on cuts to benefit programs.

In an ABC interview, Obama did not reject a Republican call to raise the age of Medicare eligibility from 65 to 67, a proposal many Democrats strongly oppose.

The proposal is "something that's been floated," Obama said, not mentioning that he had tacitly agreed to it in deficit-reduction talks with Boehner more than a year ago that ended in failure.

"When you look at the evidence, it's not clear that it actually saves a lot of money," Obama said. "But what I've said is, let's look at every avenue, because what is true is we need to strengthen Social Security, we need to strengthen Medicare for future generations, the current path is not sustainable because we've got an aging population and health care costs are shooting up so quickly."

Obama's plan would raise $1.6 trillion in revenue in part by raising tax rates on incomes over $200,000 for individuals and $250,000 for couples. He has recommended $400 billion in spending cuts over a decade.

He also is seeking extension of the Social Security payroll tax cut due to expire Jan. 1, a continuation in long-term unemployment benefits and steps to help hard-pressed homeowners and doctors who treat Medicare patients.

The White House summary noted that Obama last year signed legislation to cut more than $1 trillion from government programs over a decade, and was proposing $600 billion in additional savings from benefit programs.

Boehner's plan, in addition to calling for $800 billion in new revenue, envisions $600 billion in savings over a decade from Medicare, Medicaid and other government health programs, as well as $300 billion from other benefit programs and another $300 billion from other domestic programs.

It would trim annual increases in Social Security payments to beneficiaries and gradually raise the eligibility age for Medicare.

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