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Obama back in Washington, but fiscal cliff talks stall

By Star-Advertiser & Associated Press

LAST UPDATED: 11:35 a.m. HST, Dec 27, 2012

President Barack Obama is back in Washington D.C. after cutting short his Hawaii vacation to try to hammer out a deal with Republicans to avert a huge increase in taxes for most Americans with the expiration of the Bush-era tax cuts next week.

Before leaving Hawaii, Obama made separate phone calls to congressional leaders to discuss the impending fiscal cliff.

A White House official says Obama called Reid, House Speaker John Boehner, Senate Republican leader Mitch McConnell and House Democratic leader Nancy Pelosi late Wednesday. 

The calls come amid little progress before the Dec. 31 deadline to avoid the fiscal cliff. Americans face major tax increases and spending cuts if Congress and the White House fail to reach a compromise by the end of the year.

Adding to the woes confronting the middle class was a pending spike of $2-per-gallon or more in milk prices if lawmakers failed to pass farm legislation by year's end.

White House aides disputed reports that Obama was sending lawmakers a scaled-down plan to avoid the "fiscal cliff," and gave no indication whether he would invite congressional leaders to a White House meeting either later Thursday or possibly on Friday.

A little more than four days from the deadline, there was no legislation pending in either the House or the Senate to stave off tax increases and spending cuts that economists say could send the economy into a recession. Far from conciliatory, the rhetoric was confrontational and at times unusually personal.

Senate Majority Leader Harry Reid, D-Nev., accused House Speaker John Boehner of running a dictatorship, citing his refusal to call a vote on legislation to keep taxes steady for most while letting them rise at upper incomes. The bill "would pass overwhelmingly," Reid predicted, and said the Ohio Republican won't change his mind because he fears it might cost him re-election as speaker when the new Congress convenes next week.

Boehner seems "to care more about keeping his speakership than keeping the nation on a firm financial footing," he said in remarks on the Senate floor.

Brendan Buck, a spokesman for Boehner, responded in a similar vein. "Harry Reid should talk less and legislate more if he wants to avert the fiscal cliff. The House has already passed legislation to do so," he said, referring to a measure that extends existing cuts at all income levels.

The risk of higher milk prices stems from the possibility that existing farm programs will expire at year's end, and neither chamber of Congress has scheduled a vote on even a temporary extension to prevent a spike. There have been unverified estimates that the cost to consumers of a gallon of milk could double without action by Congress.

Addressing the GOP rank and file by conference call, Boehner said the next move is up to the Senate, which has yet to act on House-passed bills to retain expiring tax cuts at all income levels as well as replace across-the-board spending cuts with targeted savings aimed largely at social programs.

"The House will take this action on whatever the Senate can pass - but the Senate must act," he said, according to a participant in the call.

At the same time, Boehner told Republican lawmakers the House would convene on Sunday evening.

Without congressional action, current tax rates will expire on Dec. 31, resulting in a $536 billion tax increase that would touch nearly all Americans. Moreover, the military and other federal departments would have to cut $110 billion in spending.

But while economists have warned about the economic impact of tax hikes and spending cuts of that magnitude, both sides are increasingly proceeding as if Congress could still act in January in time to retroactively counter the effect on most taxpayers and government agencies without causing economic harm.

The stock market was glum, with stocks falling for the fourth day in a row amid the stalled negotiations and a report that consumer confidence had plunged to its lowest level since August.

The negotiatoin  over the fiscal cliff has been Obama’s first test of muscle after his re-election in November. Obama ran on a theme of having the wealthy pay a greater share toward deficit reduction with a focus on raising upper tax rates for individuals earning $200,000 or more and couples making more than $250,000. In negotiations with Boehner toward a deficit reduction plan of more than $2 trillion over 10 years, he offered to increase that threshold to $400,000, but those negotiations collapsed.

Obama left his vacation compound in Kailua at about 9 p.m. Wednesday night, leaving first lady Michelle Obama and daughters Maila and Sasha in Hawaii to finish their vacation.

However, first dog Bo left with Obama. Reporters traveling with the president saw the dog on the return flight to Washington.

A few residents waved goodbye as Obama’s motorcade left Kailua.

At Hickam, Obama greeted members of the armed forces who were waiting in a holding area off the tarmac, before Air Force One took off at about 10 p.m.

Obama arrived in Hawaii early Saturday morning after the House and Senate recessed for the Christmas break. 

Before leaving the White House last Friday, the president had called on lawmakers to pass scaled-down legislation that prevents tax increases for the middle class, raises rates at upper incomes and renews expiring unemployment benefits for the long-term jobless. He said he still supports a more sweeping measure to include spending cuts to reduce deficits, but said they could wait until the new year.

That capped an unpredictable week in which Boehner pivoted away from comprehensive deficit reduction talks with Obama to an aborted attempt to push legislation through the House that retained existing tax levels except above $1 million. Anti-tax Republicans rebelled at raising rates on million-dollar earners, and Boehner backpedaled and canceled the planned vote.

Without congressional action, current tax rates will expire on Dec. 31, resulting in a $536 billion tax increase over a decade that would touch nearly all Americans. In addition, the military and other federal departments would have to begin absorbing about $110 billion in spending cuts.

Failure to avoid the "fiscal cliff" doesn't necessarily mean tax increases and spending cuts would become permanent, since the new Congress could pass legislation cancelling them retroactively after it begins its work next year.

But gridlock through the end of the year would mark a sour beginning to a two-year extension of divided government that resulted from last month's elections in which Obama won a new term and Republicans retained their majority in the House.


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Highinthesierras wrote:
Just as Barry planned. Now, the politicians get to do what they like best, lower taxes and raise spending in 2013. And you thought this entire kabuki theater deal was real. When will you ever learn, never, ever, trust politicians.
on December 27,2012 | 09:42AM
awahana wrote:
Man's best friend.
And I'm not talking about Boehn-head, either.
on December 27,2012 | 10:31AM
CriticalReader wrote:
The new House of Representative GOP should oust Boehner as Speaker. He's turning the GOP into the party of the 2%. And that's about what GOP's share of the vote in the next election will be if they don't make a change.
on December 27,2012 | 10:35AM
64hoo wrote:
stop blasting the house our late senator and the rest of the senate should take the blasting too. heck the senate did not even propose a bill the last 4 years they and obama only played golf. so i blame the senate more than the house.
on December 27,2012 | 06:00PM
64hoo wrote:
and yet you dumbocrats rule the senate and the presidency and they can't even get nothing done we go over the cliff blame the dumbocrats in the senate for this not the repubs.
on December 27,2012 | 06:51PM
CriticalReader wrote:
The Senate is in Washington, D.C. convened. The House IS NOT convened on the orders of Boehner. The positions are clear. Each side proposes programs that net out a lower, 900 billion budget deficit for 2013 (YES. BOTH sides). Except, all the GOP proposes is to keep tax rates (for the wealthy - the so called job creators - in particular) the same, but cut 100 billion out of the budget. Obama's is a mix of tax increases on the wealthy and government spending designed to stimulate the economy FURTHER. On taxes, the GOP dogma is the same old: Don't increase taxes on the rich for they are the job creators (which has prroven to be absolutely untrue over the past 6 years). On budget cuts, the GOPs approach is to simply deny current benefits to the less fortunate (which is just downright oppressive). So, the choice is simple, a GOP approach to protect tax cuts that DON'T WORK and hurting Americans, or the Obama approach based on a tax approach PROVEN to stimulate the American economy, and a budget approach that accounts for people who need help - AGAIN, to reach the SAME budget deficit numbers. The GOP position is what Boehner is holding out for. That's why he's gotta go.
on December 27,2012 | 08:23PM
64hoo wrote:
still blaming the repubs as i said your dumbocrats in the senate have not propose a bill in 4 years they could have adopted a bill to avoid this situation but dummies like inouye and rest of the dummies up there un the senate did not do a thing.. so stop trying to put the blame on other people when its your dumbocrats screwing this country up.
on December 28,2012 | 10:31AM
kainalu wrote:
The GOP hence, the country being held hostage by the Tea Party. What most thought was a grass roots movement by the people, was really a carefully orchestrated plan by the Koch brothers, currently the 3rd and 4th richest men in the United States. They're the primary funding source for those TP candidates that made it. Boehner however, supported the moderate-Republicans in those primaries, so ... . Meanwhile, the latest Pew Poll shows that 53% of Americans are holding the Republicans responsible for this pending train wreck, while 33% hold the Democrats responsible. When it comes to the leadership however, the Speaker of the House versus the President, it's nearly 2:1 in favor of the President - 53% to 27%. Otherwise, sourcing the IRS, less-than 3% of Americans that filed in 2011 earned more than $200K-a-year ($250 jointly), so it begs to question: who are the ignorants from the more-than 97% rest-of-us that oppose the President's plan to revert the tax-code back for that specific high-income group to what it was before Bush cut them? smh
on December 27,2012 | 10:43AM
Pacej001 wrote:
Boehner has offered revenue increases, through cutting deductions, and Obama has refused to consider it. Koch brothers conspiracy? I'll see you a Soros and raise you a dozen hollywood billion/millionaires. Polls: Gallup reports disapproval of Republicans 10% lower, democrats 10% higher than Pew. ---------- Who are the ignorants? those that think that an $80 billion a year tax increase (increase on $200/250K earners, is going to make a difference by reducing our deficit from $1.2trillion/year to $1.02 trillion. Big deal. Never mind that the CBO estimates modest loss of job growth, 200,000 jobs less from Obama's tax increase proposal. Of course modest job losses don't feel modest if you're the one without a job. So, to sum up: Obama's tax increase will achieve essentially nothing, except slowing job growth,and leave the great drivers of our tsunami of debt, entitlements, untouched. Translation: Obama could care less about the debt. This is all about politics and the next congressional election.
on December 27,2012 | 05:28PM
Pacej001 wrote:
Sorry, the $80 billion would bring the deficit down from $1.1 trillion to $1.02 trillion.
on December 27,2012 | 05:42PM
entrkn wrote:
I think I would rather see us go over the cliff and then put back what needs to be put back instead of making compromises that should not be made...
on December 27,2012 | 01:43PM
64hoo wrote:
its to late to do anything now they can't do it in 4 days were gonna hit the fiscal cliff so thats thats.
on December 27,2012 | 05:42PM
64hoo wrote:
stop blaming the house for everything the senate is just as much at fault as the house remember the senate has never had a bill proposal to the president in four years they were like obama playing golf and getting nothing done. so the senate is to blame for this fiscal cliff not just the house or tea party members so stop blasting the house and blast the late inouye and the senate for getting nothing done.
on December 27,2012 | 05:57PM
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