'Fiscal cliff' talks turn sour: Are prospects for deal vanishing?

Meetings between Treasury Secretary Tim Geithner and congressional leaders on Thursday marked the first post-election acrimony between the parties in their pursuit of a solution to the “fiscal cliff.”

Republicans stewed over the fact the White House has not offered them specific spending or entitlement changes. Democrats dismissed Republican complaints as empty posturing, saying that the GOP was on the verge of conceding to the Democratic goal of higher tax rates on the wealthy and that the onus is, in fact, on Republicans to spell out the entitlement and government spending reductions they seek.

Together, the statements by both parties end the brief honeymoon at the outset of negotiations and signal the “push-back moment,” where each party publicly retrenches in hopes of getting more out of its adversary, and where the possibility of a deal could still break for better or worse, says Julian Zelizer, a congressional historian at Princeton University.

House Speaker John Boehner (R) of Ohio sounded the first sour note of what had been three weeks of "kumbaya" from Washington’s political leadership, a time when leaders of both parties have waxed eloquent about the need to work together to solve the pending fiscal cliff, some $600 billion in higher taxes and lower government spending scheduled to hit the economy beginning Jan. 1.

“Two weeks ago we had a very productive conversation at the White House. Based on where we stand today, I would say two things,” Speaker Boehner told reporters after his meeting with Secretary Geithner, the point person for the White House’s negotiations with Congress. “First, despite claims that the president supports a ‘balanced’ approach, the Democrats have yet to get serious about real spending cuts. And secondly, no substantive progress has been made in the talks between the White House and the House over the last two weeks.”

The criticism that Mr. Obama has not laid out specific reductions to discretionary government spending or entitlement programs, such as Medicare, was also on the lips of Senate minority leader Mitch McConnell (R) of Kentucky.

“To date, the administration has remained focused on raising taxes and attending campaign-style events, with no specific plans to protect Medicare and Social Security or reduce our national debt in a meaningful way,” Senator McConnell said in a statement. “And today, they took a step backward, moving away from consensus and significantly closer to the cliff.” 

Both Republican leaders put the onus on the president to outline the way forward.

“The only reason we will go over the cliff is if the White House continues to fail to show the leadership necessary to get an agreement that reflects the compromise the American people expected when they elected a divided government,” McConnell said.

Princeton’s Professor Zelizer said the move by Boehner to pour cold water on the talks was “inevitable,” because of the need to show the GOP caucus – still bitterly opposed to new tax revenues – that he is fighting for the best possible deal.

“That’s how negotiations work: You don’t totally give in in at the beginning of the process,” Zelizer said. “There has to be a moment where you tell your adversary, ‘No.’ ... He logically wants to see how much he can get."

The Senate Democratic leadership, on the other hand, sounded buoyant about chances for a deal after meeting with Geithner.

Sen. Charles Schumer (D) of New York said he was “confident” the parties could reach a bipartisan agreement before Christmas – and that the deal would almost certainly have higher taxes on the wealthy.

Republicans are “not going to openly concede on this point this far out from the deadline,” said Senator Schumer. “But they see the handwriting on the wall.”

Democrats were gleeful at recent comments from about a dozen Republicans showing a willingness to increase government revenues in general or, as Rep. Tom Cole (R) of Oklahoma put it, to simply go along with Democratic demands to extend the Bush tax cuts for the 98 percent of Americans with household income below $250,000 and fight for the rest later.

“They’re roiling,” Schumer said of the GOP. “And that’s why we believe, on taxes, they’ll eventually come around to us.”

And what of specific plans for reducing obligations for Medicare and other entitlement programs? Both sides have, in the past, proposed specific savings. House Republicans passed a bill that would terminate the spending reductions known as the "sequester" and outlined changes to Medicare and Medicaid in their budget proposal last year.
 
Democrats, lead by Obama, have also offered proposals for cutting spending in the past. On Thursday, White House spokesman Jay Carney pointed to the president's proposals during the summer of 2011 to the "supercommittee" tasked with finding more government spending reductions, as well as the president's 2012 budget proposal, as evidence of specific plans to cut government expenditures.

“You cannot negotiate against yourself,” Schumer said, meaning that the GOP would have to put a new proposal in writing.

With just 11 legislative days before Christmas, both sides are waiting for the other to go first in proposing the spending reductions and entitlement reforms needed to avert the fiscal cliff.