Spending Daily | December 14, 2012

Nearing Cliff Obama and Boehner Meet Again
The Hill reports, “Speaker John Boehner (R-Ohio) and President Obama met Thursday at the White House for fiscal talks amid increasing pessimism the two can hammer out a deal before Christmas. The 50-minute long Oval Office meeting was the first between the two since Sunday. It followed a day of harsh rhetoric and attacks that suggested Obama and Boehner were digging in rather than narrowing their differences on taxes and entitlements. Aides to Obama and Boehner described the meeting as ‘frank’ and emphasized that ‘the lines of communication remain open.’ Treasury Secretary Tim Geithner and White House director of legislative affairs Rob Nabors also participated in the meeting, the administration confirmed. Earlier on Thursday, a visibly frustrated Boehner used a press conference to rip Obama for not taking spending cuts seriously. ‘It’s clear the president is just not serious about cutting spending. But spending is the problem,’ Boehner said. ‘Republicans want to solve the problem and get this spending line down. The president wants to pretend spending isn’t the problem. That’s why we don’t have an agreement.’”

Some Dems Ready To Make Medicare Concessions
Politico reports, “A growing number of Democrats in the Senate are ready to offer up a key concession on Medicare to try to reach a deal on the fiscal cliff: higher premium payments for wealthy seniors. But that might not get them very far. … Yet as an olive branch to Republicans, a number of Senate Democrats are ready to drop their long-standing opposition to Medicare means testing if it means the GOP will raise taxes on the top 2 percent of wage earners and if it’s part of a large, deficit reduction plan. But there is an overwhelming opposition in the Senate and House Democratic caucuses to going any further, showing just how little room President Barack Obama has to maneuver as he tries to reach a deal with House Speaker John Boehner on the fiscal cliff.”

Boehner Shifts From Taxes To Spending In Cliff Talks
CBS News reports, “As the ‘fiscal cliff’ negotiations have seemed to hit a stalemate, President Obama and House Speaker John Boehner met for 50 minutes at the White House this afternoon, their third in-person meeting on the issue and their first since Sunday. ‘It’s clear the president is just not serious about cutting spending. But spending is the problem,’ Boehner said at a news conference earlier today. ‘The president wants to pretend spending isn’t the problem. That’s why we don’t have an agreement.’ The president later told Minneapolis CBS affiliate WCCO that he’s “hopeful that we can get this resolved. It shouldn’t be hard to get resolved.’ ‘I’m willing to do a lot more cuts in spending, we also need to pair it up with a little revenue. … Couple two dollars of spending cuts for one dollar of revenue,’ he continued.”

Fed’s Fisher: Latest Ploy To Improve Economy ‘Hard To Reverse’
Reuters reports, “The Federal Reserve’s latest moves to reduce borrowing costs and boost the economy could be hard to reverse, a top Fed official said on Friday. ‘I argued that basically we were at risk of what I call a “Hotel California” monetary policy,’ Dallas Fed President Richard Fisher said in an interview on CNBC. Like the Eagles song of that name, he said, ‘You can check out any time you want, but you can never leave.’ Fed decided on Wednesday to maintain its monthly asset purchases of $45 billion of Treasury bonds and $40 billion of mortgage-backed securities, until it saw a substantial improvement in the outlook for the U.S. labor market.”

S&P Warns Even Well Managed State Budgets Might `Not Weather Another Recession’
Reuters reports, “Even the best managed U.S. state and local budgets might not be able to weather another economic recession, Standard and Poor’s Ratings Services warned on Thursday, saying another downturn would likely be worse for states than cities and counties. In an outlook on state and local government credit quality in 2013, the rating agency said it now considers the economy as important as financial management when it assesses state and local debt. … ‘For the state and local government sector, the main risk to credit quality from the fiscal cliff would be indirect and would stem from the fiscal pressures of another recession. There would also be direct effects, however, from reduced federal grants,’ S&P said.”

“Cliff Fight Is Likely to Take a Toll on Growth”
The Wall Street Journal reports, “Much of Washington’s focus on the ‘fiscal cliff’ is driven by two possible economic outcomes: Either the White House and Congress forge a grand bargain to resolve the budget battle and economic growth takes off, or they fail and recession hits. But the result of the fight could well be something in between: more middling growth next year as business and consumer confidence suffers from another drawn-out spectacle. Even the best-case scenario would be a deficit-reduction agreement between President Barack Obama and congressional leaders that would take effect in two stages. They would enact some deficit-reduction measures immediately and set the stage for an overhaul of the tax code and entitlement programs next year. That still means months of working out the thorny details of tax and spending policy, prolonging the uncertainty that has weighed on businesses and consumers.”