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Obama Says A Deal Is 'Within Sight' But Not Done Yet

Dec 31, 2012
Originally published on December 31, 2012 7:55 pm

Transcript

ROBERT SIEGEL, HOST:

From NPR News, this is ALL THINGS CONSIDERED. I'm Robert Siegel.

AUDIE CORNISH, HOST:

And I'm Audie Cornish. President Obama said today that lawmakers are within sight of a deal to avert the damage of the fiscal cliff, but they're not there yet, and, indeed, they still have a ways to go. Officially Congress won't make the midnight deadline to avoid the fiscal cliff, but they're still working on options. In just a few hours, automatic tax hikes are set to take effect for Americans at all income levels. This afternoon, Mr. Obama surrounded himself with middle-class taxpayers as he once again urged lawmakers to cut a deal.

PRESIDENT BARACK OBAMA: Preventing that tax hike has been my top priority because the last thing folks like the folks up here on this stage can afford right now is to pay an extra $2,000 in taxes next year. Middle-class families can't afford it. Businesses can't afford it. Our economy can't afford it.

CORNISH: NPR's Scott Horsley was at the White House and joins us now. And, Scott, it seems like the busy weekend and, of course, all of this very busy day on the Hill has yielded some progress. What can you tell us about the proposal that's shaping up?

SCOTT HORSLEY, BYLINE: Well some progress, Audie. Vice President Biden has been busy negotiating with his old Senate colleague, Mitch McConnell, the Republican leader, and those two pretty much agreed on the tax portion of the deal. It would extend Bush-era tax cuts for all but the very wealthiest families, those making upwards of $450,000 a year. Now taxes on capital gains and dividends would also go up for people above those levels, and there would be a modest increase in the estate tax.

So this deal would bring in more tax revenue than the government is currently collecting, but it would bring in less revenue than Mr. Obama could have achieved by simply going over the fiscal cliff and allowing all the Bush-era tax cuts expire.

CORNISH: And the president initially wanted a slightly broader definition of wealthy Americans who would pay more in taxes. It seems like the White House has shifted on that.

HORSLEY: Yeah. Going back to the president's first campaign four years ago, he always said he wanted to keep tax rates low for 98 percent of Americans - those making less than $250,000 - while allowing rates to rise on the top 2 percent. But this deal limits most of the tax hikes to less than 1 percent, those making north of $450,000. And it also means those top 1-percenters would enjoy low tax rates not only on the first $250,000 of income, but the first $450,000 of income. So it's a big tax break for the wealthy and a big loss of potential revenue for the government.

That's why some Democrats in the Senate and others on the left are unhappy with this deal. They wanted Mr. Obama to drive a harder bargain. He's never going to have more leverage to extract higher taxes than he does right now. The White House position though is that they got some good things in return, a year's worth of unemployment insurance and a five year extension of some tax credits that benefit the working class.

CORNISH: Scott, we've been hearing for hours that a deal is close but lawmakers clearly aren't there yet. So what still has to be worked out?

HORSLEY: Yeah. The automatic tax hike is just 80 percent of the fiscal cliff. The other 20 percent is automatic spending cuts due to take effect this week. And Mr. Obama said those cuts are a problem.

OBAMA: We're using an ax instead of a scalpel. May not always be the smartest cuts. And - so that is a piece of business that still has to be taken care of.

HORSLEY: Democrats wanted to put those spending cuts off for as long as possible but right now they're just looking at maybe a two-month postponement.

CORNISH: Short time left here, Scott, but getting negotiators to agree may be one thing, getting it through Congress, of course, is another. What are the chances of anything happening soon?

HORSLEY: Well, as you said, the House is not going to do it tonight. It's not even clear the Senate is going to vote tonight. The president said, half-jokingly, today that the Congress takes the last possible second to do its business. And in this case it looks like at least several hours beyond the fiscal cliff deadline.

CORNISH: NPR White House correspondent Scott Horsley. Scott, thank you.

HORSLEY: My pleasure, Audie. Transcript provided by NPR, Copyright National Public Radio.