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Obama Says He's Hopeful About Budget Deal

Obama Says He's Hopeful About Budget Deal

By Alexis Simendinger and Caitlin Huey-Burns - December 21, 2012

President Obama said Friday evening that a small rescue package or series of bills may be necessary after Christmas to keep middle-class and unemployed Americans from being harmed after Jan. 1 as spending cuts and tax hikes set to impact everyone take effect automatically.

The larger, $4 trillion deficit-cutting effort that hit yet another snag in the House Thursday night remained his fiscal goal, the president said. But referring to himself as a “hopeless optimist,” Obama suggested that 2012 might end in deeply partisan divisions.

In a seven-minute statement in the White House briefing room, Obama said he spoke with House Speaker John Boehner and met with Senate Majority Leader Harry Reid to discuss next steps. He described the fallback plan as an effort to pass, perhaps in a series of measures, elements of a fiscal package that attract bipartisan agreement.

He said those elements can include: extending middle class tax cuts for families earning less than $250,000; extending unemployment insurance benefits, set to expire for as many as 2 million people at the end of the year; and what he called provisions that lay “the groundwork for further work on both growth and deficit reduction.”

Obama said he believed the fallback proposal was “an achievable goal” that can be enacted after Christmas.

Shortly after his statement, the president and his family flew to Hawaii for the holidays. He originally hoped to return to Washington on Jan. 6, and the president can sign legislation when away from the White House, but it was widely expected that he would return before the end of the year.

In a statement Friday, Reid said the fallback Democrats have in mind would include averting the $1 trillion across-the-board discretionary spending cuts known as sequestration.

But the president did not explicitly mention other expiring provisions of the so-called fiscal cliff: a remedy for the alternative minimum tax, set to hit middle-class families in the new year; the 2 percent payroll tax holiday, set to disappear from all workers’ paychecks Jan. 1; and an adjustment to prevent a steep reduction in reimbursement to physicians under Medicare, which Congress has repeatedly dodged with annual fixes.

The president also said nothing about raising the nation’s borrowing authority, which has been a point of contention with Republicans and a key White House demand as a prerequisite for any signature by the president. The Treasury Department believes the nation will need to seek approval from Congress to borrow more to meet U.S. obligations by next spring.

The president, appearing relaxed and striking an upbeat note, called the interregnum over Christmas a period to “cool off” and regroup.

“As we leave town for a few days to be with our families for the holidays, I hope it gives everybody some perspective,” he said. “Everybody can cool off; everybody can drink some eggnog, have some Christmas cookies, sing some Christmas carols, enjoy the company of loved ones.”

Boehner spokesman Brendan Buck, responding to the president’s comments, said the speaker remains hopeful Obama is “finally ready to get serious about averting the fiscal cliff. . . . Speaker Boehner will return to Washington following the holiday, ready to find a solution that can pass both houses of Congress.” 

Earlier in day, only hours after fellow party members revolted against his backup plan to avert the fiscal cliff, Boehner said there is a way for those at both ends of Pennsylvania Avenue to agree on a solution. But as for precisely how the deeply divided sides will arrive at that point, the prayerful Boehner said, “God only knows.”

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Alexis Simendinger covers the White House for RealClearPolitics. She can be reached at asimendinger@realclearpolitics.com. Caitlin Huey-Burns is a reporter for RealClearPolitics. She can be reached at chueyburns@realclearpolitics.com.

Alexis Simendinger and Caitlin Huey-Burns

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