(WASHINGTON) — President Obama and House Speaker John Boehner just can’t seem to break through an impasse in their “fiscal cliff” talks, increasing pessimism about a deal by Christmas and now threatening to sidetrack billions in federal aid for victims of Superstorm Sandy.
After weeks of public posturing and private negotiations, both sides remain firmly dug in with their opposing positions on tax hikes and spending cuts for deficit reduction.
The White House, invoking the president’s re-election and public opinion polls on its side, still insists there will be no deal without a tax-rate increase on the top 2 percent of U.S. income-earners. House Republicans are demanding significant changes to entitlement programs to curb spending, which Democrats flatly oppose.
The gridlock on how to best reduce the deficit and debt threatens to derail another pressing piece of business at hand: the White House’s $60 billion emergency-relief request for states devastated by Sandy.
Some Republicans are balking at the size of the request — which was endorsed by the governors of the affected states, including New Jersey Republican Gov. Chris Christie — noting that its price tag would nearly wipeout any deficit savings Democrats are seeking next year by raising tax rates on the rich.
Other lawmakers have said the aid package should be offset with a fresh batch of spending cuts, which could be hashed out in committee hearings early next year. The Federal Emergency Management Agency (FEMA) still has $5 billion in its Disaster Relief Fund, they say, enough to last until March.
Congressional leaders on both sides warned members on Wednesday to prepare for a working Christmas in Washington unless a compromise can be reached soon. The “fiscal cliff” hits in 19 days, triggering a cascade of automatic tax hikes and deep spending cuts that could thrust the economy back into recession.
Obama and Boehner have traded a series of proposals over the past few days, speaking at least once by phone this week. The president lowered his desired target for new tax revenue from $1.6 trillion to $1.4 trillion; Boehner has indicated his willingness to raise more than the $800 billion he put on the table.
But the Ohio Republican said on Wednesday that the two sides are nowhere near a deal.
“His plan does not fulfill his promise to bring a balanced approach to solving this problem,” Boehner said. “It’s mainly tax hikes, and his plan does not begin to solve our debt crisis. It actually increases spending.”
Obama predicted on Monday that Republicans will ultimately accept tax hikes for the wealthy and signaled new willingness to make “tough” spending cuts. But he did not offer specifics.
“If the Republicans can move on that [taxes], then we are prepared to do some tough things on the spending side,” Obama told ABC’s Barbara Walters this week. “Taxes are going to go up one way or another. And I think the key is that taxes go up on high-end individuals.”
In the event both sides cannot reach a broad deal, there is still some optimism about a last-ditch effort by both parties to prevent an income tax hike on 98 percent of earners.
The Senate has already passed a measure extending tax rates for families earning $250,000 a year or less. The House could decide to act on that, and nothing more, if the impasse reaches the 11th hour.
Copyright 2012 ABC News Radio
Seth Fiegerman, CNN
Dylan Byers, CNN
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Ariane de Vogue and Laura Jarrett, CNN