Fiscal Cliff Averted -- Now What?
In a speech before the Business Roundtable on Dec. 5, 2012, Mr. Obama warned, "We are not going to play that game next year."
"If Congress in any way suggests that they're going to tie negotiations to debt ceiling votes and take us to the brink of default once again as part of a budget negotiation -- which, by the way, we had never done in our history until we did it last year -- I will not play that game," the president said. "Because we've got to break that habit before it starts."
In earlier "fiscal cliff" talks, Mr. Obama proposed a two-year ceasefire in debt limit negotiations. House Speaker John Boehner offered one year in return, and Republicans wanted more Democratic concessions in return.
Ultimately, yesterday's "fiscal cliff" deal didn't address the issue at all. In the remarks he gave after the House passed the deal, Mr. Obama once again warned against a debt ceiling fight: "I will not have another debate with this Congress about whether they should pay the bills that they've already racked up through the laws that they passed," he said. "We can't not pay bills that we've already incurred."
Around the same time Washington will hit its debt limit, the "continuing resolution" by which Congress is funding the federal government will expire. Since Congress has been too dysfunctional to pass a real budget, it passed short-term "continuing resolutions" to keep the government running. The current resolution is set to expire on March 27, leaving open the threat of a government shutdown.
Looking for deficit reduction
With all of these issues coming down the pike, the stage is set for another round of potentially tense negotiations over how to reduce the deficit.
During "fiscal cliff" negotiations in mid-December, Mr. Obama gave Republicans some idea of what concessions he'd be willing to make when it comes to spending on programs like Social Security and Medicare. One of his proposals delivered to Boehner, the president offered to agree to $1.2 trillion in spending cuts.
About $400 billion of those cuts would have come from savings to health care entitlements like Medicare and Medicaid. Another $200 billion would have come from cuts in domestic discretionary spending, divided equally between defense and non-defense programs. Around $130 billion would have come from adjustments to defining the cost-of-living -- a change in calculations that would have effectively cut benefits for Social Security recipients.
Now that Congress has passed a "fiscal cliff" bill without any of those concessions and that actually increases deficits, Republicans are intent on cutting spending in the next fiscal battle -- not raising any more tax revenue. "Now that we have permanently settled how much revenue the government's going to take out of the economy, we can move on," Rep. David Camp, R-Mich., chair of the House committee in charge of taxes, said on the House floor Tuesday night.