In the escalating battle over how to avoid a looming economic contraction next year, Democratic leaders are continuing to rebuff Republican efforts to avert scheduled tax hikes and military spending cuts without bringing new tax revenues into the deficit-reduction mix.
“Once Republicans are willing to abandon their commitment to more tax breaks for multi-millionaires and special interests and their plans to end Medicare, I am confident that we can reach an agreement,” wrote Senate Majority Leader Harry Reid (D-NV) in a Tuesday letter to Republicans. “Unfortunately, it appears that Republicans’ blind adherence to Tea Party extremism is making it impossible to reach this sort of balanced agreement before the election.”
Reid’s letter came in response to a letter from 41 Senate Republicans demanding action while continuing to reject the prospect of asking wealthier Americans to contribute more to debt-reduction.“Instead of addressing this fiscal cliff, President Obama and Congress have spent much of the past year advancing misguided redistributionist policies in the name of fairness,” the GOP senators wrote last Thursday. “The American people have made it clear that they are not interested in politically-motivated redistribution of wealth.”
The so-called fiscal cliff, which triggers next January 1, includes the expiration of all the Bush tax cuts, automatic across-the-board spending cuts from last year’s debt limit deal, as well as the lapsing unemployment benefits and a significant reduction in Medicare physician reimbursement rates.
Economists fret that the failure to act to prevent that sequence of events could seriously harm the recovery, a possibility lawmakers overwhelmingly want to avert. House Speaker John Boehner (R-OH) raised the stakes last week by re-issuing his ultimatum from last year that the next increase in the debt limit — timed roughly to the fiscal cliff — be paired with dollar-for-dollar debt reduction.
But for now, the bickering amounts to little more than election-year political positioning. Legislators openly admit that no serious action will be taken before the lame-duck session, and the outcome of any agreement will likely be molded by the outcome in November.