Taxes Are A Stumbling Block To Fiscal Cliff Talks

DAVID GREENE, HOST:

This is MORNING EDITION from NPR News. I'm David Greene.

RENEE MONTAGNE, HOST:

And I'm Renee Montagne.

Americans are not optimistic that leaders here in Washington will strike a budget deal in time to avoid automatic tax increases and spending cuts. A new poll by the Pew Research Center found nearly half the country expects the budget stalemate to drag on.

GREENE: It is a political game of chicken. And by nearly 2-to-1, those surveyed say Republicans will get the blame for a crash. President Obama and congressional Republicans do seem far a part with no clear path to a resolution right now.

And we've brought in two of our colleagues. NPR's Tamara Keith covers Capitol Hill and Scott Horsley covers the president. We hope they can break this down for us. Good morning to you both.

TAMARA KEITH, BYLINE: Good morning.

SCOTT HORSLEY, BYLINE: Good morning.

GREENE: Well, Scott, let's begin with you. The major difference between the parties here still seems to be this question of tax rates. Has there been any movement?

HORSLEY: Not really, David. Republicans' position since the election has been that they're willing to accept more tax revenue but not an increase in marginal income tax rates. But in an interview with Bloomberg Television yesterday, the president was adamant that people making more than a quarter million dollars a year must see their tax rates go up.

PRESIDENT BARACK OBAMA: The reason I say that is not to punish success or go after folks just because they're wealthy. It's a simple proposition that you can't raise enough revenue, and if you don't raise enough revenue through closing loopholes and deductions, then it's going to be middle-class families who make up the difference.

GREENE: So, Scott, it sounds like it's not just a matter of tax rates, but it's a difference of opinion on whether closing these loopholes can actually make up revenue.

HORSLEY: Well, that's right. We've reported, for instance, that you can theoretically raise a lot of money by closing loopholes. But the White House says if you really try to limit the impact of that to the top income families, and if you try to say protect charitable contributions, the amount of revenue you can raise drops off pretty sharply.

GREENE: Well, Tamara Keith, House speaker John Boehner put his on offer on the table this week, $800 billion in additional tax revenue, but it calls for tax rates that are actually lower and not higher. He also is talking about cuts to Medicare, Social Security. I mean, talk about some of the pressures that he's under, as he navigates this on the Hill.

KEITH: Well, he's getting it from all sides. You know, this offer didn't come with any details on which of these deductions would be cut, or which loopholes would be closed. And so, Democrats are crying out for more specifics. And then on the right, he's getting pressure from conservative groups who say that his opening offer didn't do enough in terms of spending cuts. And then also, putting revenues on the table, not surprisingly, isn't unpopular with some in his party.

Senator Jim DeMint, who's influential among the Tea Party flank of the Republican Party, put out a press release saying speaker Boehner's $800 billion tax hike will destroy American jobs. So that's not exactly a glowing review.

GREENE: OK. So as we get into the month of December here, both sides seem to be done in. We have this poll suggesting that if, you know, if we go over this cliff that at this point at least American would tend to blame Republicans. I mean, who do you both think has the upper hand really?

HORSLEY: Well, I think the president has the upper hand. You know, in their counteroffer to the White House, the House Republicans made reference to what they call status quo election. But the Democrats really don't see it that way. While the GOP kept the majority in the House, they lost seats in the House, they lost seats in the Senate. And, of course, the president was re-elected after explicitly campaigning on the need for higher tax rates on the wealthy.

The most important ace in the hole for the president though, is the fact that if he does nothing - if there is no deal - guess what? Tax rates for the wealthy go up along with tax rates for everybody else.

KEITH: And Republicans, even conservatives in the House conference, realize they're in a tough spot. I want to play a piece of tape from James Langford. He's a freshman from Oklahoma and this is how he summed up the GOP bargaining position yesterday.

REPRESENTATIVE JAMES LANGFORD: It's a terrible position because by default the Democrats get what they want. They get spending decreases in defense on a very significant level and they get tax rates to go up to the Clinton level, that they all, over and over again, say we like that Clinton tax rates. They get that by default.

KEITH: He basically said that all they can do now is argue their position on tax rates, hope for the best and try to get this over as soon as possible.

And, you know, the one big thing that the Republicans have out there as their trump card, is the debt ceiling. We're going to bump up against that again and Congress would have to sign off. But unlike a year and a half ago in that big fight, it doesn't seem like Republicans are really spoiling to have this fight again - down to the wire, at least.

GREENE: All right. Well, I'm sure we'll be talking about this much more with both of you, and listen to your reporting as it goes on. NPR's Scott Horsley and NPR's Tamara Keith, thank you both for talking to us this morning.

KEITH: Glad to be with you.

HORSLEY: You're welcome. Transcript provided by NPR, Copyright NPR.