House Speaker John Boehner said President Barack Obama must “get serious” about the fiscal cliff while the speaker remains “hopeful” about talks to avert more than $600 billion in spending cuts and tax increases.
Following a meeting today with Treasury Secretary Timothy Geithner and a telephone conversation with Obama last night, Boehner told reporters in Washington there has been no substantial progress in the discussions in the past few weeks. “This is a moment for adult leadership,” he said.
“Despite the claims that the president supports a balanced approach, the Democrats have yet to get serious about real spending cuts,” said Boehner, an Ohio Republican. Without “serious” discussion of spending cuts, “there is a real danger of going off the fiscal cliff,” he said.
The S&P 500 increased 0.4 percent to 1,415.06 at 1:04 p.m. in New York. The Dow Jones Industrial Average rose 36.48 points, or 0.3 percent, to 13,021.59.
Treasuries erased losses and the dollar pared its decline versus the euro. Yields on benchmark 10-year notes dropped to 1.62 percent from as high as 1.64 percent on the day. The euro was little changed at $1.2955 at 12:11 p.m. New York time after rallying as much as 0.5 percent. The yen was little changed versus the greenback at 82.08.
Geithner, Obama’s lead negotiator on efforts to avoid the end-of-the-year fiscal cliff, is meeting separately today with each of the top four leaders in Congress. It is the first round of direct talks with congressional leaders since Obama hosted them on Nov. 16 at the White House.
In addition to spending cuts, Republicans are seeking overhauls of entitlement programs such as Medicare in exchange for any agreement to provide additional tax revenue. They oppose raising tax rates for any income level.
White House press secretary Jay Carney repeated today that Obama “will not sign” an extension of the Bush-era tax cuts for the top 2 percent of wage earners. The only way to achieve deficit-cutting goals is to raise rates on upper-income taxpayers, Carney said.
Senate Majority Leader Harry Reid, a Nevada Democrat, said today that Obama has made his position clear and that Democrats need a proposal from Republicans on what sort of spending cuts they want.
Democrats are all “on the same page” on letting tax cuts expire for top earners, Reid said. “Republicans know where we stand.”
Geithner met separately with Reid and Senate Minority Leader Mitch McConnell, a Kentucky Republican. After his meeting, McConnell said in a statement, “Republicans have been very clear on the need for the president to put forward a specific, balanced plan.” He said the administration today “took a step backward, moving away from consensus and significantly closer to the cliff.”
Geithner will meet later today with House Minority Leader Nancy Pelosi, a California Democrat.
Yesterday, chief executives from more than a dozen U.S. corporations shuttled from the Capitol to the White House and pressed for an agreement. Union leaders had visited Capitol Hill to lobby against any compromise that would cut entitlement programs as Republicans press for benefit cuts to Medicare and Social Security.
The Congressional Budget Office has warned that if Congress doesn’t avert the fiscal cliff, the economy could slip into recession next year and boost the unemployment rate to 9.1 percent in the fourth quarter of 2013, compared with 7.9 percent now.
Eager for Compromise
Obama and Boehner said yesterday they were eager to reach a compromise before the end of the year, without publicly offering concessions. Boehner described their telephone conversation last night as “direct and straightforward.”
While Boehner dismissed any notion that talks between him and the White House have broken down, he said, “I am disappointed in where we are. I am disappointed in what’s happened over the last couple of weeks.”
“Without spending cuts and entitlement reform it is going to be impossible to address the country’s debt crisis and get our economy going again,” Boehner said at the press conference.
Republicans are demanding an increase in the Medicare eligibility age and an alternative yardstick for calculating inflation that would reduce annual Social Security cost-of-living adjustments, according to a Republican aide who wasn’t authorized to speak publicly.
While these are the same proposals the president considered as part of failed debt talks last year, Democrats are now ruling out changes to Social Security as part of an agreement.
Meanwhile, Republican leaders have shown no signs they’ll answer the president’s call for $1.6 trillion in new tax revenue by ending the George W. Bush-era tax rates for top earners. Fresh revenue should come from a tax overhaul in 2013, they say.
Amid the negotiations, Obama hosted for lunch at the White House Mitt Romney, the Republican presidential nominee he defeated Nov. 6.
Senator Charles Schumer, a New York Democrat, said it wasn’t surprising that Republicans aren’t capitulating so far ahead of the year-end deadline.
“But they see the handwriting on the wall,” Schumer, the third-ranking Senate Democrat, told reporters today. Schumer referred to a suggestion by Representative Tom Cole, an Oklahoma Republican, that party members accede to the president’s demand that Congress extend the tax cuts for families with incomes of less than $250,000 a year.
“I think he said what a lot of Republicans are privately assuming is going to happen on taxes,” Schumer said.
Geithner, 51, has said he plans to leave office next month after securing a deficit compromise, his last deal with Congress in a four-year tenure that also has included shepherding the Dodd-Frank financial rules overhaul to passage.
Obama was criticized by Republicans for taking his message on the road. Obama and Boehner are pursuing a different approach to talks this year after several rounds of face-to-face meetings between Obama and congressional leaders failed in 2011, according to a Republican congressional aide.
Both sides have appointed negotiators, with Geithner as Obama’s lead emissary. House Budget Committee Chairman Paul Ryan of Wisconsin and Ways and Means Committee Chairman Dave Camp of Michigan, both Republicans, are advising Boehner.