Fiscal Cliff

Fiscal Cliff Standoff: Day 29, Democrats Enter Hostile Territory

Emboldened Democrats dare to enter enemy territory, and the weak are starting to succumb. By Daniel Gross.

Fiscal cliff hostage situation. Day 29. It’s starting to get like the Donner Party. The weaker members are starting to succumb.

Tony Fratto, the former Bush press official and power-tweeter, sent out a 140-character plea for surrender of a sort. “I don’t think Clinton tax rates are ideal, but we did live with them for eight years. Just return to them and start over next year.” Rep. Kay Granger, a Republican from Texas, said it might make the most sense just to extend the Bush-era tax cuts for everybody except the top 2 percent of earners, and move on. By nightfall, Granger had yet to be challenged to a duel.

The Democrats, emboldened, didn’t shrink from delivering their message directly to audiences that might be somewhat hostile. Treasury Secretary Tim Geithner went on CNBC, which has been running a campaign urging Congress and the White House to “rise above” the fiscal cliff, and reiterated the administration’s stand that taxes on high-income earners must go up. If not … well, then the administration was prepared to join the Thelma & Louise Caucus. In response, the stock market rose. Go figure.

President Obama went into what might be considered more hostile territory. He ventured out to the Business Roundtable, a group whose CEO members likely spent lots of time and effort trying to defeat the president earlier this fall. Obama told them that, in effect, there were no hard feelings. However, he was really intent on seeing that taxes on CEOs rise—and fast. “So what we’ve said instead is let’s allow higher rates to go up for the top 2 percent—that includes all of you, yes, but not in any way that’s going to affect your spending, your lifestyles, or the economy in any significant way.” Later in his remarks, he assured them that “We’re not insisting on rates out of spite, but rather we need to raise a certain amount of revenue.” (Pro tip: when someone says they’re not doing something out of spite, it’s probably a safe bet there are a few drops of spite involved.)

Obama went on to tell the dealmakers that if he could get Republican leaders to realize the reality that higher revenue could be paired with entitlement cuts, “then the numbers actually aren’t that far apart.” He continued: “Another way of putting this is we can probably solve this in about a week; it’s not that tough.” (Full disclosure: I’m short Republican leaders realizing reality.)

The Obama administration went out of its way to present a hardened position. White House spokesman Jay Carney noted that the Office of Management and Budget is preparing for the sequester that would take place in the event we went over a fiscal cliff. No serious talks were reported. Boehner held a press conference in the afternoon and pleaded for the president to submit a revised proposal. “We’re ready and eager to talk to the president and work with him,” Boehner said, in a less-than-convincing tone.

There was a brief fillip in the afternoon when it was reported that Obama and Boehner had spoken on the phone. My guess? It was a case of butt-dialing.

And the sun set on Day 29 of the fiscal cliff hostage situation.