Rhetoric, blame game intensify on Capitol Hill as ‘fiscal cliff’ deadline approaches

WASHINGTON—With the country on the brink of a “fiscal cliff” that could plunge the economy back into recession, the partisan rhetoric over taxes and spending further intensified on Tuesday as both sides attempted to pin blame and the year-end deadline quickly approached.

Indeed, the likelihood of a deal before Christmas seemed to diminish Tuesday, as both sides acknowledged they were running out of time.

“Christmas is two weeks from today everybody,” Senate Majority Leader Harry Reid reminded, saying that a deal remained a possibility but “not something we can do easily.”

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House Speaker John Boehner, during a floor speech Tuesday, put the onus on President Obama to put forward a plan that could win passage in both chambers of Congress—a responsibility that Democrats refused to shoulder on their own.

“We’re still waiting for the White House to identify what spending cuts the president is willing to make as part of the ‘balanced approach’ that he promised the American people,” Boehner said.

“The longer the White House slow-walks this process, the closer our economy gets to the fiscal cliff,” Boehner said. “Right now the American people have to be scratching their heads and wondering, ‘when is the president going to get serious?’ ”

The president was back in Washington Tuesday, after traveling to Michigan the day before to sell the American public on his plan to allow tax rates to rise on the wealthy while preserving tax cuts for the middle class.

“There is a deal out there that’s possible,” said White House spokesman Jay Carney, adding that “the parameters of a compromise are pretty clear.”

Obama has been steadfast in his position of raising tax rates on the wealthy—which is a certainty if the Bush-era tax cuts are allowed to expire without congressional intervention—as part of a proposal that would raise $1.6 trillion over 10 years.

But Republicans have been just as adamant on deep spending cuts, particularly on entitlements such as Medicare, with Boehner proposing cuts of up to $1.4 trillion, partly by raising the eligibility age for Medicare from 65 to 67, and slowing annual benefit increases for Social Security recipients. Boehner has called for $800 billion in new revenues, but has not specified from where the money would come.

Reid called Republican proposals all “bluster” and “generalizations.” Noting their call for spending cuts, Reid said Republicans should specify what they would cut. “We can’t read their minds,” he said.

Tuesday’s theatrics didn’t necessarily mean that a deal was not in the works—both sides say they want one—but it is was unclear whether any deal would be announced before Christmas. Most members of Congress have not been privy to the details being negotiated by Boehner and Obama.

Democrats intimated that Boehner is under pressure by his party’s conservative faction to remain hawkish on spending.

If a deficit-reducing deal is not reached by the end of the year, $1.2 trillion in automatic cuts, roughly equally between defense and domestic programs, and spread out over a decade, will begin in January. The first round amounts to $110 billion.

On the horizon is a double whammy of tax increases and deep spending cuts that would siphon more than $500 billion from the US economy next year, and trillions of dollars more over the next decade, unless Congress and the White House intervene. If they don’t, the economy could be hit with another recession, according to the nonpartisan Congressional Budget Office.

While much of the rhetoric has focused on raising tax revenues and cutting spending, other factors are just as crucial, said Isabel Sawhill, a fiscal policy expert at the Brookings Institution.

“We’ve lost sight of the other provisions that will keep the recovery going,” Sawhill said.

Also due to expire is a payroll tax holiday put in place by Democrats as part of the president’s stimulus package and meant to keep more money in the pockets of recession-hit Americans. Temporary provisions for the Alternative Minimum Tax are also ending.

Sawhill expressed pessimism that a deal would be cobbled together by Christmas. Until a deal is reached, she said, members of Congress are engaged in their usual antics by beginning the blame games.