Cliff averted, it's on to the next fiscal crisis

January 2, 2013 @ 9:34 pm


President Barack Obama waves as he gets off Air Force One upon his arrival at Joint Base Pearl Harbor-Hickam, Honolulu, Hawaii, Wednesday, Jan. 2, 2013. The president is back in Hawaii for vacation after a tense, end-of-the-new-year standoff with Congress over the fiscal cliff. (AP Photo/Carolyn Kaster) | Zoom
Associated Press

WASHINGTON (AP) - Onward to the next fiscal crisis. Actually, several of them, potentially. The New Year's Day deal averting the "fiscal cliff" lays the groundwork for more combustible struggles in Washington over taxes, spending and debt in the next few months.

President Barack Obama's victory on taxes this week was the second, grudging round of piecemeal successes in as many years in chipping away at the nation's mountainous deficits. Despite the length and intensity of the debate, the deal to raise the top income tax rate on families earning over $450,000 a year _ about 1 percent of households _ and including only $12 billion in spending cuts turned out to be a relatively easy vote for many. This was particularly so because the alternative was to raise taxes on everyone.

But in banking $620 billion in higher taxes over the coming decade from wealthier earners, Obama and his Republican rivals have barely touched deficits still expected to be in the $650 billion range by the end of his second term. And those back-of-the-envelope calculations assume policymakers can find more than $1 trillion over 10 years to replace automatic across-the-board spending cuts known as a sequester.

"They didn't do any of the tough stuff," said Erskine Bowles, chairman of Obama's 2010 deficit commission. "We've taken two steps now, but those two steps combined aren't enough to put our fiscal house in order."

In 2011, the government adopted tighter caps on day-to-day operating budgets of the Pentagon and other cabinet agencies to save $1.1 trillion over 10 years.

The measure passed Tuesday and signed Wednesday by Obama prevents middle-class taxes from going up while raising rates on higher incomes. It also blocks severe across-the-board spending cuts for two months, extends unemployment benefits for the long-term jobless for a year, stops a 27 percent cut in Medicare fees paid to doctors and prevents a possible doubling of milk prices.

The alternative was going over the cliff, an economy-punching half-trillion-dollar combination of sweeping tax increases and spending cuts. Despite the deal, the government partially went over the brink anyway with the expiration of a two-year cut in Social Security payroll taxes of two percentage points.

Action inside a dysfunctional Washington now only comes with binding deadlines. So, naturally, this week's hard-fought bargain sets up another crisis in two months, when painful across-the-board spending cuts to the Pentagon and domestic programs are set to kick in and the government runs out of the ability to juggle its $16.4 trillion debt without having to borrow more money.

Unless Congress increases or allows Obama to increase that borrowing cap, the government risks a first-ever default on U.S. obligations. Republicans will use this as an opportunity to leverage more spending cuts from Obama, just like they did in the summer of 2011.

House Speaker John Boehner, R-Ohio, vows that any increase in the debt limit _ which needs to be enacted by Congress by the end of February or sometime in March _ must be accompanied by an equal amount in cuts to federal spending. That puts him on yet another collision course with Obama, who has vowed anew that he won't let haggling over spending cuts complicate the debate over the debt limit.

The cliff compromise represented the first time since 1990 that Republicans condoned a tax increase. That has whipped up a fury among tea party conservatives and increased the pressure on Boehner to adopt a hard line in coming confrontations over the borrowing cap and the spending cuts that won only a two-month reprieve in this weeks' deal.

Put simply, House Republicans are demanding new spending cuts _ possibly through changes in Social Security and Medicare benefit formulas _ as a scalp, and they're dead set against raising more revenues through anything less than an overhaul of the tax code now that Obama has won higher taxes on the wealthy.

"Now the focus turns to spending," Boehner said after Tuesday's vote, promising that future budget battles will center on "significant spending cuts and reforms to the entitlement programs that are driving our country deeper and deeper into debt."

Obama is just as adamant on the other side, saying higher revenues have to be part of any formula for further diverting the automatic spending cuts.

While conservative activist Grover Norquist gave Republicans a pass on violating his anti-tax pledge with this week's vote, he and other forces on the right won't be so forgiving on any future effort to increase revenues.

The refusal of Republicans to consider additional new taxes is sure to stir up resistance among Democrats when they're asked to consider politically painful cuts to so-called entitlement programs like Medicare. Democratic protests led Obama and Boehner to take a proposal to increase the Medicare eligibility age off the table in the recent round of talks.

The upshot? More scorched-earth politics on the budget will probably dominate the initial few months of Obama's second term, when the president would prefer to focus on legacy accomplishments like fixing the immigration problem and implementing his overhaul of health care.

The relationship between Boehner and Obama has never been especially close and seemed to have suffered a setback last month after the speaker withdrew from negotiations on a broader deficit deal. The two get along personally, but politically, a series of collapsed negotiations has bred mistrust. The White House has the view that Boehner cannot deliver while the speaker is frustrated that matters brought up in his talks with the president are not followed through by White House staff.

And on the debt limit, Boehner and Obama at this point are simply talking past each other.

"While I will negotiate over many things, I will not have another debate with this Congress over whether or not they should pay the bills that they've already racked up through the laws that they passed," Obama said after the deal was approved.

Said Boehner spokesman Michael Steel: "The speaker's position is clear. Any increase in the debt limit must be matched by spending cuts or reforms that exceed the increase."


(Copyright 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.)
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Comments (190)


  • Add A Comment

  • MittensRomney wrote...
    I dodno, is it better to be a parrot wing or a turkeys butt?
    January 1, 2013 10:30 am
    but I have noticed that people who say LEFT WING PARROT say it over and over again!
    { "Thumbs Up":"1","Thumbs Down":"-1" }
  • Forrest wrote...
    Our only solution is an amendment to the constitution.
    January 1, 2013 12:10 pm
    Term limits. One 5 year term for president, two 6 year terms for senators, six 2 years terms for representatives. If they want to move from one house to the other, there must be a two year hiatus. Seniority doesn't work for business, unions or government. We need leaders who lead and don't pander to special interests. We need leaders who worry about the future of America rather than re-election.
    { "Thumbs Up":"1","Thumbs Down":"-1" }
  • when reality hits you wrote...
    If campains in America was 100% funded by the people, the US would be #1
    January 1, 2013 12:21 pm
    - in education, roads, health, defense and so on.
    { "Thumbs Up":"1","Thumbs Down":"-1" }
  • CH wrote...
    King Obama has spoken - jump in line munchkins . . . .
    January 1, 2013 1:18 pm
    and who is holding up the show now. Bingo the House Republicans Circus Clowns !!!! Not they will be gone in 2014. We Americans will vote them out of office.
    { "Thumbs Up":"1","Thumbs Down":"-1" }
  • HPD 5-0 wrote...
    More spending CUTS. Yes. Please. For the future of our nation.
    January 1, 2013 1:21 pm
    The current spending is NOT SUSTAINABLE, so this has to be done. Yet the left just cannot grasp that. Why? Without bribes to voters, they become obsolete. So spend, baby...spend and to he\ with tomorrow.
    { "Thumbs Up":"1","Thumbs Down":"-1" }
  • CH wrote...
    More spending CUTS. Yes. Please. For the future of our nation? . . . .
    January 1, 2013 1:45 pm
    OK here is the AXE cut the Military all you want(just a reminder the cutting started Jan. 1st because of the party of NO). '0-0' Republican cuts are coming in 2014 King Obama made sure of this. Your party is a joke and your munchkins will turn on you. Hail to King Obama!!!!
    { "Thumbs Up":"1","Thumbs Down":"-1" }
  • rational wrote...
    The democrats own this economy and all that entails
    January 1, 2013 1:56 pm
    Of course they will always blame someone else when their schemes fail...hypocrisy and deciept are the 2 primary pillars of progressivism.
    { "Thumbs Up":"1","Thumbs Down":"-1" }
  • wsualumn wrote...
    Rational
    January 1, 2013 2:36 pm
    The Dems own this economy? Really? Where were you between 2000 and 2008 when we had tax cut and spend, spend, spend baby? Wars without payment plans? Medicine for seniors with out a plan? Stimulus checks? All of that debt that counts with this debt, but the Dems own it? It must be nice living in your distorted world of reality.
    { "Thumbs Up":"1","Thumbs Down":"-1" }
  • rational wrote...
    wsualumn
    January 1, 2013 4:29 pm
    Funny you should ask...I was complaining about the spending, including the items you listed. And now the progressives are adding another 4 trillion in spending on top of the 16.4 trillion debt we have now, and about 10 1/2 of those trillion since Obama.

    But you're correct, I should have broadened it from just demos to just the progressives own this mess as they're the ones who have created the entirety of it.

    Someone tried to insult me by writing that I'd fit into the 18th century. Well, I wouldn't want to lose some of the technological advances we've had since then, in particular the medical ones, but I sure do miss the United States and returning to a legitimate goverment within constitutional bounds sure would be nice. Sadly, progressives have screwed up every country they have come to power in. Couple that with the third world corruption and taliban sorts and you've made this a rather unappealing world. Good going...you killed the golden goose.

    { "Thumbs Up":"1","Thumbs Down":"-1" }
  • maplefish wrote...
    WSU
    January 2, 2013 12:34 am
    Thinks its OK to continue to spend & spend & spend. I'm willing to bet WSU is a government employee. Zero competence in economics and less than zero in accountability...."it's not my problem" "somebody else can fix it later".... Democrats: constantly striving for a new level of hypocrisy....
    { "Thumbs Up":"1","Thumbs Down":"-1" }
  • wsualumn wrote...
    Maple and Rational
    January 2, 2013 6:21 am
    For a couple of guys that find it "convenient" to blame the dems or progressives for all of the spending problems, they might want to consider looking at what happened under Reagan, and Bush II to our deficits. They then might want to then look at what happened under carter and Clinton. They were the only 2 presidents in the 20th century that left a budget surplus. So much of the money that is being spent under Obama is expenditures just to keep the government running. What big spending programs has he brought forth? How many big expenditures did Bush bring forth? Who is the big spender?
    { "Thumbs Up":"1","Thumbs Down":"-1" }
  • rational wrote...
    wsualumn
    January 2, 2013 5:57 pm
    Rather random cherry picking there. Firstly, Bush is a progressive, so you'll have no arguments from me about the deficit spending under another in a long line of progressive presidents. As for Reagan, at least he wasn't a progressive, but he was saddled with democrats controlling congress for his entire term as president. Perhaps it's escaped your notice that progressives keep giving Obama a pass on his deficits by citing that the GOP controls congress...are you suggesting that only true when it's a democrat president and a republican congress?
    { "Thumbs Up":"1","Thumbs Down":"-1" }
  • rational wrote...
    What big spending programs has he brought forth?
    January 2, 2013 6:03 pm
    Perhaps you've heard of Obamacare?
    { "Thumbs Up":"1","Thumbs Down":"-1" }
  • SeattleD wrote...
    Just today Eric Cantor said
    January 1, 2013 2:49 pm
    he'd rather watch babies starve to death than watch the economy recover with Obama as president.
    { "Thumbs Up":"1","Thumbs Down":"-1" }
  • Ron_Spins wrote...
    Babies starving to death under Obamaunism
    January 1, 2013 3:14 pm
    You got it right.
    { "Thumbs Up":"1","Thumbs Down":"-1" }
  • rational wrote...
    SeattleD
    January 1, 2013 4:26 pm
    Perhaps it's your history as a psycho, or the penchant for progressives to lie, but I rather doubt that's what Eric Cantor actually said.
    { "Thumbs Up":"1","Thumbs Down":"-1" }
  • CH wrote...
    Babies starving to death under Obamaunism you got it right !!! . . . .
    January 1, 2013 3:39 pm
    and the babies are the GOP.
    { "Thumbs Up":"1","Thumbs Down":"-1" }
  • Ron_Spins wrote...
    Take your medicine now or end up in I.C.U.
    January 1, 2013 4:32 pm
    More spending cuts
    { "Thumbs Up":"1","Thumbs Down":"-1" }
  • It's me! Ha ha! wrote...
    Babies, old people, just about eveyone who pays taxes.
    January 1, 2013 4:34 pm
    Are going to be taxed into the poorhouse when the Dear Leader gets his tax increase.

    You remember that Parrots when your Dear leader for his first Dynasty said taxes would rise to pay for his dependence class spending? YOU 47 percenters and the remaining Useful Idiot voters who did what they were supposed to do and re immac the Dear Leader for his second Dynasty.

    Never forget this Left wing Parrots, YOU will be forced to live under the umbrella of Obamunism that you sentenced us Americans to with your revenge!

    { "Thumbs Up":"1","Thumbs Down":"-1" }
  • roomtemp wrote...
    "Not solved yet"
    January 1, 2013 4:39 pm
    Associated Press comes in early and strong for the understatement of the year contest...

    The problem is systemic. 60 billion in tax hikes towards a trillion dollar deficit doesn't quite get us there. And with spending increases to boot. (Gotta keep those lobbyists, erm I mean constituents! happy.) If this was a movie, it would be a comedy.

    We may have a government spending problem. (Can't let AP go unchallenged.)

    It was mentioned earlier that Obama financed 6 trillion of deficit on China's credit card. Actually, that's not true. China isn't stupid enough to buy our bonds anymore. Nobody is. The federal reserve is buying 90%+ of new issue. Can you say 'monetizing the debt' kids? Our government is selling us out to something much more dangerous than communist Chinese... Central Banks.

    Pelosi- "That is what the American people deserve." Coming from the treasonous witch that said "we have to pass the bill to see what's in it" that means a lot.

    { "Thumbs Up":"1","Thumbs Down":"-1" }
  • Ron_Spins wrote...
    What is in it?http://www.washingtontimes.com/news/2012/dec/27/obamacares-costly-new-year/
    January 1, 2013 5:29 pm
    A bunch of tax hikes on the middle class!
    { "Thumbs Up":"1","Thumbs Down":"-1" }
  • William Lawn wrote...
    An editorial in the Moonie Washington Times
    January 1, 2013 6:00 pm
    Now you can that information to the bank.

    Thanks Ron.

    You guys are just too funny.

    { "Thumbs Up":"1","Thumbs Down":"-1" }
  • Ron_Spins wrote...
    Your welcome Mr.Lawn
    January 1, 2013 6:43 pm
    The media is rife with articles on the middle class TAX INCREASES , I just selected one article at random.
    { "Thumbs Up":"1","Thumbs Down":"-1" }
  • rational wrote...
    Ron_Spins
    January 1, 2013 7:35 pm
    You know, I don't bother to provide links as much as I used to because to the extremist left moonbats every media source is too far to the right for them. And it's far easier to discount without thought or examination than to consider and, where appropriate, refute.
    { "Thumbs Up":"1","Thumbs Down":"-1" }
  • William Lawn wrote...
    It was an editorial you idiot
    January 1, 2013 8:22 pm
    And learn English.

    "Your welcome"?

    Just to make sure you understand.

    You're welcome.

    { "Thumbs Up":"1","Thumbs Down":"-1" }
  • { "Thumbs Up":"1","Thumbs Down":"-1" }