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'Fiscal cliff' talks seem stalled, but some predict a deal will emerge

This article first appeared in the St. Louis Beacon, Nov. 30, 2012 - WASHINGTON – In the new film “Lincoln,” the Civil War-weary president from Illinois tells a stubborn Confederate delegation that the epic struggle “was about proving that democracy is not chaos.”

A present-day politician from Lincoln’s home town of Springfield, U.S. Sen. Dick Durbin, D-Ill., quoted that “chaos” comment in a speech this week about the ongoing negotiations to try to reach a deal to avert the fiscal cliff and set the nation on a better financial course.

While the magnitude of the nation’s debt problem pales in comparison with Lincoln’s war, Durbin contends that the current talks are, in a sense, about how to avoid fiscal chaos by showing that the nation’s divided government is capable of wise actions.

Judging by this week’s roller-coaster of ups and downs in public pronouncements about the fiscal cliff debate, chaos seemed a possibility. On Thursday, House Speaker John Boehner, R-Ohio, complained that he was “disappointed” with the lack of progress and Senate GOP Leader Mitch McConnell, R-Ky., said the White House “took a step backward” in its talks with congressional leaders.

They were responding to the latest White House proposal, outlined by Treasury Secretary Timothy F. Geithner in a meeting Thursday with key lawmakers, asking that Congress agree to give up its control over federal debt levels – and agree to $50 billion or more in new stimulus spending next year – as part of a deficit deal that would hike taxes on the wealthy. U.S. Sen. Roy Blunt, R-Mo, said the new offer “is simply not a serious proposal” – and stood no chance of being approved.

Those demands indeed ruffled GOP feathers, but insiders contend that, despite the public posturing, some progress is being made behind the scenes. That's because the White House and most lawmakers believe it would be a mistake to go over the cliff – that is, allow sharp tax increases and the start of steep across-the-board spending cuts – in a month’s time.

Durbin, the second-ranking Senate Democrat, said he is “more optimistic than most” that a deal can be reached – even though “we are playing ping-pong up here and rolling bowling balls under the table. There are different levels of activity here.”

What’s most important is what lies underneath the surface – in the closed-door talks – rather than what politicians say in public. “The public debate will continue, but the real work will have to be done on a person-to-person basis between the speaker’s office and the president,” Durbin said.

In effect, the fiscal cliff debate is a test of whether a divided federal government – with Democrats controlling the White House and Senate, and Republicans in charge of the U.S. House – can take constructive action on a pain-inducing, politically divisive issue

Blunt, the fifth-ranking Senate Republican, agrees with Durbin that “at the end of the day, this will probably be a Speaker Boehner – President [Barack] Obama agreement, if there is an agreement.”

But Blunt – who backs the GOP leadership position that serious cuts in spending and entitlement costs need to be part of a deal, and that any revenue should result from tax reform rather than rate hikes – finds fault with the way Obama has handled the talks so far.

He contends that former presidents “would have all been saying at this moment: ‘Here’s what ought to be done. And I want to do my best to persuade you to do it.’ Rather than, ‘I’m going to go out in the country and give a lot of speeches and hope that you get a lot of phone calls in your office.’”

Blunt asserted, in a discussion with reporters this week, that Obama’s current approach “is not the way to solve this – and it needs to be solved. And I hope the president decides he’s going to lead in finding a solution that can pass the House of Representatives.”

Then again – as Durbin and U.S. Sen. Claire McCaskill, D-Mo., point out – Obama just won the presidential election during which he campaigned on a pledge to protect families earning under $250,000 a year (about 98 percent of taxpayers) from tax increases.

That’s one point that McCaskill plans to stand firm on, but she says she is flexible on other areas related to spending and entitlement changes. “Frankly, the details of [a deal] are less important in the global sense than the fact that we can reach a compromise, that it would be real and there would be close to $4 trillion in long-term debt reduction,” she told reporters, adding that she is “stubbornly optimistic” about getting a deal.

“That means everyone’s going to hurt a little. And everyone is not going to get their way,” said McCaskill. “I have been specifically vague in order to try to be part of the group that brings people together” on Capitol Hill to back a deficit deal.

What’s the point of remaining vague on specific goals? “When people around here draw a line in the sand, then they’ve got to be going ‘back on their word’ when they agree to a compromise,” McCaskill explained. “So I have said I believe we have to have a balanced approach. There has to be money in all three legs of the stool” – revenue, entitlement reform and spending cuts.

In the meantime, not only politicians, but also labor and business groups, are making their positions known in Washington.

This week, Mike Louis, secretary-treasurer elect of the Missouri AFL-CIO, joined other Missouri labor leaders in meeting with McCaskill, U.S. Reps. Lacy Clay, D-St. Louis, and Jo Ann Emerson, R-Cape Girardeau, to drive home labor’s point of view – opposing cutbacks in programs like Social Security and Medicare.

“I think there’s either going to be a deal we can live with – or there’s not going to be a deal,” Louis told the Beacon. “No deal is better than a bad deal.”

On the other side of the issues, lawmakers and the White House also heard from businesses warning that the deficit can’t be adequately addressed merely by tax increases on the wealthy – and that cuts are needed in federal spending and entitlement costs.

Small businesses came down on different sides of the debate. For example, Lew Prince, the managing partner of Vintage Vinyl Inc. in St. Louis, expressed a relatively liberal position when he joined a dozen other small business leaders at a meeting with Obama this week at the White House.

Prince, a member of Business for Shared Prosperity, said in a statement after the session that he argued for ending the Bush-era tax cuts for the wealthy. “Expecting high-income tax cuts to trickle down as job creation is like pouring gas on your hood and expecting it to fuel your engine,” he said.

While some congressional Democrats argue that it would not be disastrous to let all Bush-era tax cuts to expire at year’s end – allowing lawmakers to claim they voted for tax cuts in a new package next year – most legislators want to avoid the likely shock to financial markets that would result from that approach.

That’s why many predict an initial deficit-reduction “down payment” deal next month, which would block tax increases for most Americans, define some spending cuts (perhaps equal to the amount that the “debt ceiling” is increased) and outline cost-saving changes in Medicare. The real work would be done next year, when lawmakers hammer out details on how to overhaul the tax code and entitlements.

The goal would be to send a message to the American people and the world that U.S. democracy -- while chaotic at times -- can function to the public good.

“We face the same challenge – Democrats, Republicans and the president,” Durbin said. “I don’t know if there was a mandate that came out of” the election. “But there certainly was a work order that said: Get to work, do it together and get the job done.”

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