Reid on John Boehner: "I Don't Understand His Brain"

By: From CNN
By: From CNN

WASHINGTON (CNN) -- After two years of endless debate and a national election, Democrats and Republicans on Thursday found themselves right where they started -- blaming each other for stagnant negotiations on taxes and government spending.

House Speaker John Boehner declared himself disappointed that "no substantive progress" has occurred in two weeks of talks, saying Republicans were waiting for the White House to propose significant spending cuts.

Senate Democratic leader Harry Reid responded to Boehner by telling reporters: "I don't understand his brain."

The stakes are high this time, as the nation faces an imminent deadline for automatic tax increases and spending cuts -- the looming fiscal cliff at the end of the year that economists fear could cause another recession.

After meeting separately with President Barack Obama's point man on the talks, the top congressional Democrats and Republicans said the failure to move forward was the other side's fault.

Obama "has to get serious," Boehner told reporters following his discussion with Treasury Secretary Timothy Geithner. "It's very clear what kind of spending cuts need to occur, but we have no idea what the White House is willing to do."

Senate Democrats said Boehner had it backward because Obama has made his positions clear -- especially his call to extend middle-class tax cuts while allowing rates on the wealthiest 2% of Americans to return to higher rates of the 1990s.

Some specifics of the White House plan became clear later Thursday.
A Republican congressional aide familiar with the proposal said it calls for $1.6 trillion in tax increases.

"All of that upfront -- in exchange for only $400 billion in spending cuts that come later," said the aide, calling the offer "completely unbalanced and unrealistic."

Republican aides said the $1.6 trillion was higher than previously discussed. Democrats said the number should not be a surprise, adding Obama discussed it on the campaign trail.

A senior House GOP aide said Geithner, among other things, proposed an increase in top marginal rates as well as on capital gains and dividends, totaling about $960 billion. Additional tax increases would amount to $600 billion, the aide said. Several senior GOP aides said the White House plan was a step in the wrong direction.

A Democrat familiar with the talks says the administration proposal includes closing loopholes and deductions.

The plan includes $50 billion in stimulus spending and a home mortgage refinancing package, a Republican aide told CNN. Obama would work on $400 billion savings in Medicare and other entitlements next year, without specifying where they'd come from, the aide says.

The White House, after the Geithner meeting, said the president has previously signed $1 trillion in spending cuts into law.

"It's time for Republicans in Washington to join the chorus of other voices -- from the business community to middle class Americans across the country -- who support a balanced approach that asks more from the wealthiest Americans," the White House said in a statement.

White House spokesman Jay Carney said Obama's insistence on having wealthy Americans pay a higher tax rate was the president's consistent message throughout his first term, and especially during his successful re-election campaign.

"We remain optimistic that this can get done, but the president's principles are clear," Carney said. "It's not like we didn't have this debate for the last year."

Both Republicans and Democrats insist they want a comprehensive agreement to tackle the nation's chronic federal deficits and debt, starting with a deal to avoid automatic tax hikes and spending cuts set to take effect on January 1st.

However, the two sides appear far apart on the timing of taking those steps. The dispute over how to proceed is compounded by the lame-duck Congress, which is completing its work before a new legislature gets seated in January.

Obama and Democrats are pushing hard for House Republicans to immediately pass a Senate bill that would prevent most of the automatic tax increases that would result from the expiration of Bush-era tax cuts at the end of the year.

At the same time, they want to discuss a framework for substantive negotiations in the new Congress that would include tax reform, spending cuts and reforms of popular entitlement programs such as Medicare and Medicaid.

Republicans, led by Boehner, oppose letting tax rates on the wealthiest 2% of Americans go up by passing the Senate bill championed by Obama. They also want Democrats to make firm commitments on spending cuts and entitlement reforms now, instead of waiting for negotiations next year.

"I'm disappointed in where we are. I'm disappointed over what's happened in the last couple of weeks," Boehner said of talks since he and other congressional leaders met with Obama on November 16, 10 days after the president's re-election. "But going over the fiscal cliff is serious business. I'm here seriously trying to resolve it, and I hope the White House would get serious as well."

Boehner described his talks with Geithner as "frank" and "direct" and also said he had a "straightforward" telephone call with Obama on Wednesday. His assessment of no real progress was based on both of those discussions, said the Ohio Republican.

"No substantive progress has been made in the talks between the White House and the House over the last two weeks," Boehner said.

Differences between the parties include the scope of a deficit deal, with Republicans insisting that Social Security reforms be part of it while Democrats say the government pension system is self-funded and therefore plays no role in federal deficits.

Obama also wants any deal reached in the current session of Congress to include an increase in the federal debt ceiling, which is expected to be needed as soon as February or March.

To Boehner and Republicans, the debt ceiling is a valuable negotiating tool to extract concessions from the Democrats and the president.

"Any increase in the debt limit has to be accomplished by spending reductions that meet or exceed it," Boehner declared Thursday, saying Obama would have to pay a price to raise the ceiling on federal borrowing.

Carney responded to Boehner's demand of a price by calling such brinksmanship over the credit standing of the nation "entirely inappropriate."

"Asking that a political price be paid in order for Congress to do its job to ensure that the United States of America pays its bill and does not default for the first time in history is deeply irresponsible," Carney said.

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