STEVE INSKEEP, HOST:
Here in Washington, House Speaker John Boehner addressed a major economic issue this morning. In a press conference, the Republican talked about the so-called fiscal cliff. That's the combination of higher tax rates and spending cuts due to take effect at the end of this year.
Boehner opposes the higher tax rates. He also opposes defense spending cuts, but in order to get out of them, he needs to make a deal with Democrats and the White House, and Democrats have been pushing to let many of those tax rates, the Bush-era tax rates, expire. Let's listen to what Boehner had to say today.
(SOUNDBITE OF SPEECH)
INSKEEP: We are now in the early phases, the intensifying phases of negotiations leading down to this deadline, December 31st. NPR White House correspondent Scott Horsley has been listening in.
Scott, good morning.
SCOTT HORSLEY, BYLINE: Good morning, Steve.
INSKEEP: So what is the position that Boehner is in, here?
HORSLEY: He's in a tough spot, because he knows that the White House really wants to see tax rates - wants to see tax revenues coming from the wealthiest Americans go up. This is something that the president talked about a lot on the campaign trail, and when the president didn't talk about it, the Republicans talked about it, warning that Mr. Obama would want to raise taxes on the wealthiest Americans.
So you could argue that the election we had on Tuesday was, in some way, a referendum on the question of raising taxes from the wealthiest Americans, and the president won that argument.
INSKEEP: And not only won, but even many voters for Mitt Romney, according to exit polls, said they favored higher taxes on the wealthy.
HORSLEY: That's right. So John Boehner has now - basically is in a position where he's going to have to eat higher taxes on the wealthy. The fig leaf that the White House is, I think, going to be open to leaving for the Republicans is to do this in the guise of broader tax reform, which means you might not necessarily see marginal rates on those high earners go up. You might see some closing of the deductions that are open to them. There are various ways you could get there.
But the White House is going to insist that the wealthiest Americans pay more in taxes. That was a signature position that the president has been taking. He won the argument. And now John Boehner's going to have to give some ground on that. But he's also going to have to be able to sell this to his own Republican caucus...
INSKEEP: The Republicans already in the House. Yeah.
HORSLEY: ...in the House. And so both sides are sort of circling around, trying to find a way that they can describe what's going to happen here in a way that's palatable to both Democrats and Republicans.
INSKEEP: Well, let's try to remember a little bit of history, which helps to explain how he got here. There was a huge fight over raising the debt ceiling back in 2011. The president then spoke of approving spending cuts, if they were coupled with some tax increases, in order to reduce the deficit. And John Boehner, after discussing this with the White House, walked away.
HORSLEY: That's right. And John Boehner harkened back to those discussions in his press conference this morning, when he said: You all remember that when the president and I were at the bargaining table a year and a half ago, there were revenues on the table. In specific, there were about $800 billion in revenues. That's what you get from raising taxes on the wealthy. And John Boehner and the president had a sort of tentative agreement to do that. In the end, of course, the president wanted more revenues, and John Boehner realized he couldn't even deliver the 800 billion from the Republican caucus in the House at that point. The deal fell apart. But something like that, I think, I going to be the - at least the starting point in negotiations now.
INSKEEP: Does this get even bigger? Because Republicans have been saying, in this roundabout way, OK, we can accept more revenues of some sort. But they are going on to say: We need spending cuts, and not only spending cuts. We want to go after Medicare and Social Security, in some way.
HORSLEY: They want some give on entitlement, as well. And, again, the White House was prepared a year and a half ago to give some ground on entitlements, in exchange for taxes.
What you need, here, to get some sort of bargain is for the Democrats to be able to go back to their constituents and say: I know we gave up something on entitlements, but look. We got higher taxes out of the wealthy. And you need the Republicans to be able to go back to their constituents and say: I know we got some more tax revenue out of the wealthy, but we also got entitlement reform. Everybody has to get something out of this.
And right now, you know, we're going to hear from the president later this afternoon, sort of staking out his initial position. This is sort of John Boehner offering his opening gambit as they circle around and try to figure out the outlines of this agreement.
INSKEEP: I want to figure out if anything has really changed since 2011, Scott Horsley. Republicans, some of them, have said compromise was a dirty word. Now we have Tom Cole, who's a member of the House leadership, who was on our air the other day, and he used the word compromise. You have John Boehner talking about negotiations. Democrats have said explicitly they're in favor of compromise, but they also have a base that they - that could be very angry at them. Do you sense that the two sides are any more willing to deal? Has the situation changed that much that they could make a deal?
HORSLEY: Yeah, the situation has changed, and here's why: If nothing happens, if there's no agreement with Congress, then the tax rates go up in January on everybody. That - so the president doesn't really have to get an affirmative yes vote from Congress. That happens - automatically.
HORSLEY: What's more, the sequester, the other part of this fiscal cliff, the automatic spending cuts hit harder on Republican programs than Democrat programs.
INSKEEP: Scott, thanks very much.
HORSLEY: My pleasure.
INSKEEP: That's NPR's Scott Horsley.
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