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The fiscal cliff looms
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"YOU CAN'T be serious." That was House Speaker John Boehner's reaction last week when Treasury Secretary Timothy Geithner presented to him the White House proposal designed to avoid the looming fiscal cliff. Four weeks out, it's clear that no one's blinking.
The fiscal cliff--automatic spending cuts and tax increases--will, both sides agree, hurt the economy if they go into effect on Jan. 1. "It would be very damaging to the average American," Mr. Geithner told Chris Wallace on Fox News Sunday. "No one wants to go over the cliff," agreed Mr. Boehner, interviewed for the same show. So what's the hang-up?
Political theater. It's what Washington does best. Unfortunately, it leaves the rest of the nation waiting with baited breath to see if the trapdoor will fall, not under the dueling players on the stage, but the audience.
The White House proposal includes $1.6 trillion in higher taxes over a decade, and $80 billion in new spending next year, and some budget cuts. In addition, the White House wants the exclusive power to raise the national debt limit. (That will never happen, nor should it. It concentrates too much power in the White House, regardless of its occupant.)
The new spending would be in the form of a stimulus package of extended unemployment benefits, infrastructure improvements, and an extension of Social Security payroll tax cuts. Missing from the White House proposal are serious looks at entitlement programs or tax code reform. On the latter, Mr. Geithner drew a line in the sand: "We will negotiate on reforming the tax code only if the [top] tax rate is 39.6 percent."
Mr. Boehner said he was "flabbergasted" when he received the proposal. "On the day after the election," he told Mr. Wallace, "I saw the results . I said that the Republicans are willing to put revenue on the table if there were serious spending cuts and reforms put on the table." With just seven weeks between the election and the fiscal cliff, his hope was to "speed things up."