A Big Disconnect as 'Fiscal Cliff' Clock Ticks

In this Nov. 21, 2012, file photo, President Barack Obama speaks about the Thanksgiving holiday in the Rose Garden of the White House in Washington. The White House said Tuesday, Nov. 27, that the president plans to make a public case this week for his strategy for dealing with the looming fiscal cliff.
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Just last year, Obama and top Democrats were willing during budget negotiations with Republicans to take politically risky steps such as reducing the annual inflation adjustment to Social Security retirement payments and raising the eligibility age for Medicare, which provides health care coverage to the elderly.

Now, with new leverage from Obama's election victory and a playing field for negotiations that is more favorable to Democrats than during the talks of the summer of 2011, Democrats are taking a harder line, ruling out any moves on Social Security and all but dismissing ideas like raising the eligibility age for Medicare from 65.

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"The election spoke very strongly about the fact that the American people don't want to cut these programs that actually really sustain the middle class in America and allow people to become part of the middle class," said Sen. Tom Harkin, D-Iowa.

"I think they feel somewhat emboldened by the election," said GOP Rep. Tom Price of Georgia. "How could you not when your president is re-elected after running four straight years of trillion dollar-plus deficits?"

Indeed, Obama could be in position to blame Republicans if an impasse results in the government going over the fiscal cliff. Democrats already are portraying GOP lawmakers as hostage-takers willing to let tax rates rise on everyone if lower Bush-era tax rates are not extended for the top 2 percent to 3 percent of earners — those with incomes above $200,000 for individuals and $250,000 for joint filers.

"One thing Republicans have to realize — we're in much better shape in January," said Harkin, referring to a time when taxes would have already risen and Democrats would be offering to cut taxes for all but the wealthiest Americans. "Fiscal cliff? I don't care."

Obama's opening position in the negotiations calls for $1.6 trillion in higher taxes over the coming decade, balanced by just $340 billion in cuts to rapidly growing health care programs, generally taken from health care providers instead of beneficiaries. That balance would have to change for Republicans to sign onto any agreement.

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Given the crunch of time and the complexity of issues such as tax reform and wringing savings from programs like Medicare, negotiators are working on a two-track process: an initial "down payment" of deficit cuts next month, coupled with work next year on overhauling the tax code and curbing entitlement programs.

Sen. Dick Durbin, D-Ill., a leading Senate liberal and a member of Obama's special 2010 deficit panel — which drafted a bold deficit reduction plan blending painful entitlement cuts with $2 trillion in higher tax revenues — weighed in with a demand that any short-term down payment avoid politically sensitive safety net programs.

"Progressives should be willing to talk about ways to ensure the long-term viability of Social Security, Medicare and Medicaid, but those conversations should not be part of a plan to avert the fiscal cliff," Durbin said in a speech at the liberal Center for American Progress think tank in Washington.

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