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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By ANDREW TAYLOR, Associated Press

WASHINGTON (AP) — Republicans' newfound willingness to consider tax increases to avert the "fiscal cliff" comes with a significant caveat: larger cuts than Democrats seem willing to consider to benefit programs like Medicare, Medicaid and the president's health care overhaul.

The disconnect on benefit programs, coupled with an impasse between Republicans and the White House over raising tax rates on upper-bracket earners, paints a bleak picture as the clock ticks toward a year-end fiscal debacle of automatic tax increases and harsh cuts to the Pentagon and domestic programs.

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Democrats emboldened by the election are moving in the opposite direction from the GOP on curbing spending, refusing to look at cuts that were on the bargaining table just last year. Those include any changes to Social Security, even though President Barack Obama was willing back then to consider cuts in future benefits through lower cost-of-living increases. Obama also considered raising the eligibility age for Medicare, an idea that most Democrats oppose.

"I haven't seen any suggestions on what they're going to do on spending," a frustrated Sen. Orrin Hatch, R-Utah, said Tuesday. "There's a certain cockiness that I've seen that is really astounding to me since we're basically in the same position we were before."

Well, says Obama's most powerful ally on Capitol Hill, the Democrats are willing to tackle spending on entitlement programs if Republicans agree to raise income tax rates on the wealthiest Americans — a nonstarter with Republicans still in control of the House.

"We hope that they can agree to the tax revenue that we're talking about, and that is rate increases, and as the president's said on a number of occasions, we'll be happy to deal with entitlements," Senate Majority Leader Harry Reid, D-Nev., said Tuesday.

But Reid speaks only in the most general terms, wary of publicly embracing specific ideas like boosting Medicare premiums or raising the program's eligibility age.

At the White House, Obama met with a group of small business owners. Participants described the hour-long meeting as a listening session for Obama, with the business owners urging him to reach an agreement.

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"They had one message for the president, which is they need certainty. Please get this deal done as soon as possible. They very much want consumers out there knowing that they're going to have money in their pockets to spend. That's why it's so important to pass the extension of the tax cuts for 98 percent of consumers, 97 percent of all small businesses," said Small Business Administration head Karen Mills.

Obama planned to meet Wednesday with more than a dozen leaders from large corporations, including Lloyd Blankfein of Goldman Sachs, Marissa Mayer of Yahoo!, Brian Roberts of Comcast and Arne Sorenson of Marriott.

Obama hits the road on Friday, visiting a Pennsylvania toy factory and broadcasting his case to extend current tax rates for all but those families making more than $250,000 a year.

Private White House negotiations with top aides to House Speaker John Boehner, R-Ohio, and others are cloaked in secrecy, with no evidence of headway.

"There's been little progress with the Republicans, which is a disappointment to me," Reid, a key negotiator, told reporters on Tuesday. "They talked some happy talk about doing revenues, but we only have a couple weeks to get something done. So we have to get away from the happy talk and start talking about specific things."

Republicans say it's Obama and his Democratic allies on Capitol Hill who are holding back, and they point to a balance of power in official Washington that is little changed by the president's re-election. Republicans still control the House, despite losing seats in the election. Democrats control the Senate.

"Democrats in Congress have downplayed the danger of going over the cliff and continue to rule out sensible spending cuts that must be part of any significant agreement to reduce the deficit," said Michael Steel, spokesman for House Speaker John Boehner, R-Ohio.