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Congressional Democrats dig in on 'fiscal cliff' scenario

Leaders make clear they won't take action to avert automatic tax increases and spending cuts at year-end if Republicans won't compromise on higher taxes for the wealthy.

July 16, 2012|By Lisa Mascaro, Washington Bureau
  • “If Republicans won’t work with us on a balanced approach, we are not going to get a deal,” said Sen. Patty Murray (D-Wash.) about national spending.
“If Republicans won’t work with us on a balanced approach,… (Alex Wong, Getty Images )

WASHINGTON — The game of chicken over the nation's impending "fiscal cliff" — the automatic tax increases and spending cuts due if Congress fails to act by year-end — has officially begun.

Congressional Democratic leaders made clear Monday that they had no interest in averting the bleak scenario if Republicans continued to refuse to soften their hard-line opposition to higher taxes on wealthier Americans.

"If Republicans won't work with us on a balanced approach, we are not going to get a deal," said Sen. Patty Murray of Washington, the No. 4 Democrat and the party's senatorial campaign chairwoman, during a talk at the Brookings Institution.

The Democrats' hardball negotiating position unleashed a whirlwind of criticism from Republicans, who said the tactics would hurt the economy by adding to the uncertainty.

But the Democrats' approach was used last year by the GOP, led by its tea party majority in the House, during talks with President Obama over the nation's debt limit. Analysts have said that standoff did not help the sluggish economy.

"Has it come to this, that Democrats are willing to hurt jobs and tank our economy?" asked House SpeakerJohn A. Boehner(R-Ohio).

Once again, both parties are trying to use Congress to define the political narrative heading toward November.

Senate Democrats sought Monday to advance legislation that would require any organization — including political committees or social welfare groups — to more fully identify its financial contributors. The legislation would mandate disclosure within 24 hours of expenditures of $10,000 or more, as well as the identity of donors giving at least $10,000. Republicans blocked the effort with a filibuster.

At the same time, House Republicans were readying an attack on Obama's budget priorities, voting this week on legislation that would roll back the massive Pentagon spending cuts coming in January. Congress agreed to the reductions last summer as part of a deal with the White House to raise the debt ceiling. That pact required cuts equally from military and nonmilitary spending.

Republicans have traditionally supported robust defense spending, and GOP leaders want to portray the president as gambling with the nation's military might.

Democrats, though, are unwilling to spare the Pentagon at the expense of the school lunch program and other nondefense accounts the GOP has targeted to make up the difference.

Instead, Obama and his allies on Capitol Hill would prefer to raise taxes on wealthier Americans by allowing theGeorge W. Bush-era tax breaks on annual income of $250,000 or more to expire in December as scheduled.

Economists have warned that the combination of higher taxes and steep spending cuts could spark a new recession.

Democrats believe Republicans might be willing to compromise once the spending cuts and tax increases are felt.

"That may be the only way to bring some Republicans into a position of talking," Sen. Richard J. Durbin of Illinois, the assistant Democratic leader, said late last week. "We're not going to unload our weapons at this point."

And in a show of increased coordination between the White House and the president's congressional allies, Democrats were poised to provide reinforcements for Obama's unrepentant campaign attacks on Mitt Romney's leadership at Bain Capital.

The Senate is expected to consider legislation later this week that would clip tax breaks for outsourcing. The bill, from Obama's economic "to do" list, would end tax deductions for overseas moving costs and use the money to give companies a 20% tax credit for returning operations and workers to the United States. Republicans want to tack on a provision to extend for another year all the Bush-era income tax rates, even those for the wealthy.

Like much of the legislation this week in Congress, it is not expected to be approved.

lisa.mascaro@latimes.com

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