If nothing changes, the stalemate probably would lead to a recession in the first half of 2013, according to the Congressional Budget Office. Obama and Boehner are trying to replace the immediate deficit reduction in the so-called fiscal cliff with more gradual tax and spending changes.
Obama spoke yesterday by telephone from Air Force One with Senate Majority Leader Harry Reid, a Nevada Democrat, according to a Senate Democratic aide who spoke on condition of anonymity because the talks were private. Obama met Dec. 7 with Representative Nancy Pelosi of California, the House Democratic leader.
U.S. stocks advanced yesterday, with the Standard & Poor’s 500 Index rising less than 0.1 percent to 1,418.55 at 4 p.m. in New York. Benchmark Treasury 10-year note yields were up three basis points, or 0.03 percentage points, at 1.65 percent at 8:26 a.m. today in New York, according to Bloomberg Bond Trader data.
Obama and Boehner have left rhetorical space for an agreement that would split the arithmetical difference between their opening offers.
First Step
That would suggest a deal with a top tax rate of 37 percent or 38 percent, between today’s 35 percent rate and the 39.6 percent that Obama has pushed for and that will return if Congress does nothing. An agreement in the middle could include about $1.2 trillion in additional revenue over the next decade and $1 trillion in spending cuts.
Representative Xavier Becerra, a California Democrat who is part of his party’s House leadership, said Boehner’s first step should be to relent and allow a vote in the chamber on a Senate- passed bill that would continue the tax cuts on annual income of individuals up to $200,000 and of married couples up to $250,000.
“Let my people go,” Becerra said yesterday at an event sponsored by Politico in Washington. “Let us have a vote.”
Some Republicans, including Senator Bob Corker of Tennessee, have endorsed such a move.
Debt Ceiling