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Both Sides Stake Out Positions on Cuts, Taxes

Both Sides Stake Out Positions on Cuts, Taxes

By Caitlin Huey-Burns - November 14, 2012

Congressional leaders returned to Washington this week striking a tone of urgency to avert the looming "fiscal cliff" -- a combination of tax hikes and spending cuts scheduled to take effect in January. But they began what figures to be the most critical lame-duck session in recent history very much at loggerheads.

Majority Leader Harry Reid called upon Republicans to pass a Senate bill that would freeze existing tax rates for those who earn less than $250,000 per year -- echoing the call President Obama made throughout his campaign and again on Friday -- thereby agreeing to raise taxes on the highest income earners. Republican leader Mitch McConnell opposes any tax hikes but remains open to revenue increases so long as the president sets forth a specific plan to reform entitlement programs.

Meanwhile, House Minority Leader Nancy Pelosi dismissed the notion that some Democrats would rather go over the cliff than agree to a “grand bargain” type of deal. Her caucus “absolutely” wants an agreement in the lame-duck term, she told reporters. The California congresswoman, who said she will publically announce Wednesday whether she intends to continue in her leadership role, advocated for spending cuts only to the extent that they promote economic growth.

McConnell’s push for entitlement cuts and the GOP’s opposition to tax hikes came as Obama met Tuesday with organized labor and progressive organizations at the White House to discuss the upcoming budget negotiations, scheduled to begin Friday. Labor leaders have been pressuring the president to oppose any benefit cuts to Medicare, Social Security and Medicaid. One union official denied that labor is using its contribution to Obama’s re-election as leverage in the matter, insisting that “our positions are extremely popular with the large majority of Americans. Obama ran on increasing tax rates on the rich. He was extremely clear.”

On Tuesday, the AFL-CIO released a survey it commissioned that found 62 percent of respondents say their vote signaled agreement that the wealthy should pay higher taxes; 75 percent said their vote meant they want lawmakers to protect Social Security and Medicare benefits.

Obama will meet with business leaders on Wednesday and congressional leaders on Friday to continue the fiscal cliff discussions. After a trip abroad, he will take his case to the American people and rally support for his ideas. Last week, he said the election results supported his deficit reduction policy of raising taxes on the wealthy, and he has said he won’t sign a bill extending all of the Bush-era tax cuts, as Republicans have advocated.

According to an AP report, liberal leaders who met with Obama on Tuesday came away feeling like the president understood their sentiments that higher earners must contribute more to the deficit-reduction effort.

White House Press Secretary Jay Carney told reporters Tuesday that Obama plans to bring to congressional leaders a plan “that builds on the $1.1 trillion in spending cuts that he’s already signed into law, and finds other savings both in discretionary spending and in entitlement programs, $340 billion additional savings in our health care entitlement programs, and insists as the essence of 'balance' that revenue be included.” Carney said the president will call for $1.6 trillion in revenue increases.

McConnell urged Obama to lead on the issue, asking him to present a specific reform plan. “Republicans like me have said for more than a year now that we’re open to new revenue in exchange for meaningful reforms to the entitlement programs that are the primary drivers of our debt,” he said on the Senate floor Tuesday afternoon. “Instead of . . . a willingness to solve the problem, we get the same tired talking point -- that we can’t cut our way to prosperity. Well, that may poll well. But it isn’t a plan. It’s a cliché that’s meant to shut down debate and prevent a serious proposal from ever taking shape,” the Kentucky lawmaker said. “How do we get around the stalemate? That’s simple: presidential leadership. We will arrive at a plan when the president presents one. Or we won’t get anywhere at all.”

Just as House Speaker John Boehner must lead reluctant members of the GOP base to a deal, the president has to ease concerns from liberals who believe the election gave him a mandate to increase revenues and protect entitlements.

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Caitlin Huey-Burns is a congressional reporter for RealClearPolitics. She can be reached at chueyburns@realclearpolitics.com. Follow her on Twitter @CHueyBurnsRCP.

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