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Fiscal Cliff Talks Turn Into a Game of Chicken

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Far from seeking common ground to avert a year end calamity of automatic tax hikes and spending cuts that could trigger another recession, the Democrats and Republicans appear to be trying to escort each other over the fiscal cliff.

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The critical negotiations over a way to avoid the fiscal cliff are fast turning into a game of chicken.

Shedding his optimistic disposition, House Speaker John Boehner, R-Ohio, summoned reporters Thursday afternoon to declare it was time that President Obama and the Democrats revealed how they intended to cut spending and slow the rate of growth of Medicare and other costly entitlements as part of a Grand Bargain of deficit reduction. "I've got to tell you, I'm disappointed in where we are and what has happened in the last couple of weeks," Boehner said.

Far from seeking common ground to avert a year end calamity of automatic tax hikes and spending cuts that could trigger another recession, the Democrats and Republicans appear to be trying to escort each other over the fiscal cliff. Senior administration officials had a testy meeting yesterday with Boehner and other Republicans that further soured the negotiations, and Obama is hitting the road today for Philadelphia to try to rally voters to his side in the negotiations.

While both sides fear being blamed if a deal isn't reached before the end of the year, a new poll from CNN/ORC shows that 45% of the public would blame congressional Republicans – even though the Democrats control the Senate – while just 34% would blame the president.

"Look, the White House clearly realizes that the longer they wait, the more pressure there's going to be on the Republicans," said Stan Collender, a budget analyst and expert. "So they're not rushing to get anything done. And the White House learned from the negotiations over the debt ceiling in August 2011 not to negotiate with itself. So this is a definite change in tactics that seems to be frustrating Republicans to no end."

There is general agreement that the government should commit to about $4 trillion in savings over the coming decade, which would be achieved through a combination of spending cuts, tax increases and reforms of the federal tax code and entitlement programs. But there is almost no unanimity on how to get there.

Obama's road map would include $1.6 trillion of new tax revenue and roughly $350 billion to $400 billion of additional savings from Medicare and other health insurance programs. The rest of the savings would largely be achieved by taking credit for the $2.1 trillion of long term savings agreed to in August 2011 as part of a deal to raise the federal debt ceiling by $2.1 trillion to its current $16.4 trillion level, according to Van Hollen. "The president's plan has that combination of revenue and cuts," he said. "Speaker Boehner keeps talking about revenues. We've never seen a proposal on revenues. Have you?"

Republicans have signaled that they might go along with $800 billion of additional revenue – the amount that Boehner and Obama discussed as part of their secret debt ceiling talks in 2011 – while insisting that the Democrats commit to far greater spending cuts.
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