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Fiscal Cliff Negotiators Face High Hurdles

Rep. Raul Labrador (R., Idaho) is among the conservatives who seem unlikely to embrace a bipartisan compromise. "We will continue to fight any member of our conference that decides this is a good time to raise taxes," he said last week.

Demanding Constituents

For years, Americans have enjoyed high levels of government service at low levels of taxation, historically speaking. So the government borrows about one-third of every dollar it spends, piling up debt for future generations. Both parties often talk about cutting spending. But not much happens because constituents demand services they consider important and every government program is important to someone.

Solving the fiscal cliff is daunting, not merely because politicians must make tough decisions to raise taxes and shrink programs; these are the kinds of decisions that can get a candidate defeated. There's also the magnitude of the unpleasantness needed to make a real dent in deficit-spending after so many years of a government free lunch.

Because he has to submit a budget to Congress every year, the president has proposed more specific ideas for raising revenue and reducing spending than have the Republicans. He would raise an assortment of taxes on the wealthy. Obama says he wants $1.6 trillion over 10 years in new revenues. That's double the amount Boehner has suggested. As for spending, Obama would seek cuts in health costs, farm subsidies, rent assistance, airport construction and other programs.

Republicans have offered fewer details for how to bridge the spending gap, saying the president is obligated to lead.

Republicans say lower tax rates would spur economic growth, and thereby increase overall tax revenues. Economists say this "dynamic scoring" concept, related to "supply side economics," has run out of gas at today's low tax levels. As a share of the economy, federal tax receipts over the past three years have hit their lowest levels since 1950.

Sen. Chuck Schumer (D., N.Y.) said it's "a myth" that Republicans can find enough revenue from limiting itemized deductions. "Our Republican colleagues cannot play games on revenues," he said.

That kind of tough talk makes life difficult for Boehner, Obama and the handful of other leaders trying to find a way to avoid a New Year's drive over the fiscal cliff.

Copyright 2011 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
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