A small but growing group of Republicans says the party should perhaps accede to President Barack Obama’s demand for higher tax rates for top earners so that the attention can shift to making serious cuts in benefit programs such as Medicare and Medicaid, a top Republican senator said Sunday.
Sen. Bob Corker of Tennessee, a member of the Banking Committee who had earlier presented a deficit-reduction plan of his own, said on “Fox News Sunday” that if Republicans gave in to the president’s chief demand, then “all of a sudden, the shift goes back to entitlements and maybe it puts us in a place where we actually can do something that really saves the nation.”
Within hours of Corker’s comments, Obama and Speaker John A. Boehner met privately at the White House for negotiations. Administration officials would not offer details of the discussion.
The disclosure of the meeting, however, indicated that private discussions continue in the face of Republican leaders’ public statements decrying the lack of progress and the president’s refusal so far to specify the sort of deep, long-term reductions in spending for Medicare and other social programs that they insist upon as a condition of their support for raising taxes from high earners.
The White House and Boehner’s office issued identical statements afterward saying, “The lines of communication remain open.”
On Friday, Boehner told reporters that another week had been wasted, with just three weeks left for lawmakers to avert a fiscal crisis.
Also on Friday, Obama spoke privately with congressional Democratic leaders, Sen. Harry Reid, the Senate majority leader, and Rep. Nancy Pelosi, the House minority leader, presumably to gauge what positions the Democrats in Congress could support.
Republicans have insisted that the Obama administration agree to substantial savings in entitlement programs as the two sides negotiate how to narrow the country’s huge deficits. But Corker and some other Republicans say the party ultimately will have to yield to the Obama demand of higher tax rates for top earners, potentially back to the levels that prevailed under President Bill Clinton.
That group of Republicans, he said on Fox, was beginning to realize “that we don’t have a lot of cards as it relates to the tax issue before year-end” – but that a tax-rate concession could be converted into a tactical advantage.
Corker’s comments came as key figures on network news programs mixed cautious words of optimism over the fiscal-crisis negotiations between the White House and congressional Republicans with dire warnings about what a failure to act might bring.
Christine Lagarde, the managing director of the International Monetary Fund, warned that such a failure was the gravest threat facing the still-fragile U.S. economy – greater than the European debt crisis or any uncertainty in China.
“It would result in the stock market really taking a hit,” Lagarde said on the CNN program “State of the Union.” The overall result could be zero growth next year, not the 2.1 percent growth rate projected by the IMF.
She called for a “balanced” agreement of both revenue increases and spending cuts. That is a word Obama has often used to describe his preferred outcome. Lagarde offered a tentative prediction that what she called American “pragmatism” would prevail and avert the worst outcome.
Sen. Charles E. Schumer of New York, the No. 3 Senate Democrat, also predicted that an agreement would be reached. Perhaps more optimistically, he said he thought it would include a stipulation that the national debt ceiling be raised, without further drama, when it comes due in late January or February.
“I believe, frankly, our Republican colleagues have learned that to say the government is not going to pay its debts and hold it up for something else is bad substance and bad politics,” he said on “Fox News Sunday.” “I don’t think they’ll prevail on that.”
Corker said he agreed with Schumer that a deal would be reached and “we’re not going to go over the ‘fiscal cliff.’ ” But he suggested that Republicans would not so easily give up on the debt-ceiling leverage.
“Republicans know that they have the debt ceiling that’s coming up right around the corner and the leverage is going to shift,” he said.
A Senate vote is required to raise the nation’s statutory borrowing limit.
One author of the much-disputed Simpson-Bowles debt-reduction plan, the former Wyoming Sen. Alan Simpson, a Republican, expressed some optimism Sunday. He said he thought a deal would be reached but that if it were too narrow – if it failed to make deep enough cuts in health care spending or other big social programs – the economy, and Americans, would still suffer.
“I’m an optimist,” he said on the CBS program “Face the Nation.” “I think they’ll do something, but if they do small ball, that won’t work: The markets aren’t going to listen to that.”
His partner in the plan, Erskine Bowles, who was White House chief of staff under Clinton, warned that a failure in the ongoing negotiations would be “disastrous.” But he said he was somewhat more upbeat than he was a week ago, because of signs of movement from both sides.
After weeks of what he called “kabuki theater,” the two sides have “started to tango now,” Bowles said, also on CBS.
Asked whether a deal could be reached by the end of the year, Bowles replied, “They absolutely can do it. If they don’t do it, shame on them.”