Later this week, Obama will have his first face-to-face negotiations over the Fiscal Cliff.
In a post that came out this afternoon, The Washington Post’s Zachary Goldfarb nicely summarized Obama’s opening offer:
Obama’s previous proposal called for raising $1.6 trillion in new taxes on the wealthy by allowing tax rates to increase, imposing a new special tax on millionaires and limiting deductions for the wealthy. He also proposed $340 billion in health-care and entitlement savings, continuing $1.1 trillion in spending cuts already passed into law and generating another $1 trillion in savings through the end of the wars in Iraq and Afghanistan.
The demand for $1.6 trillion in new taxes is far greater than Obama proposed in negotiations with House Speaker John Boehner (R-Ohio) in summer 2011. At the time, Obama wavered between $800 billion and $1.2 trillion in new tax revenue, depending on how much in entitlement cuts Republicans were demanding.
That story came out at 2:37 PM ET, and it’s interesting that it was in the several minutes after the release that the market sagged through the rest of the day.
Tonight Obama met with liberal groups to discuss the cliff, and in some followup tweets, Goldfarb notes a sliver of opportunity… he didn’t tell the groups anything about protecting Social Security and Medicare at all costs.
Photo: Zachary Goldfarg
It’s clear that higher taxes on the rich is the one area where Obama can’t budge (politically). His side will eat him alive.
If that can be accomplished creatively (through the Mitt idea of doing it via tax deduction eliminations) and Obama and Boehner can agree on a number, that is one possible path towards a deal.
A few other Fiscal Cliff notes…
- The negotiations haven’t even begun, and already The Right is getting angry with Boehner for selling them out.
- More and more Democrats favour going over the Fiscal Cliff before bargaining.
- But Neil Irwin at Wonkblog argues that even a short period over the Fiscal Cliff (into January without a deal) could put the US into a badly damaging recession.
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