THE “GRAND BARGAIN”: FORGET THAT!
(…) Progress toward a broad budget deal has been halting. President Barack Obamaand GOP House Speaker John Boehner met again Thursday, but the distance between the sides may be widening, with the administration distancing itself from some spending-cut options. House GOP leaders signaled they expect talks to drag past Christmas. (…)
So far, Mr. Boehner has shown no sign of giving in to Mr. Obama’s demand that tax rates for upper-income brackets rise. If anything, he seemed more determined Thursday to hunker down and wait for spending concessions from the White House.
“It’s clear the president is just not serious about cutting spending,” said Mr. Boehner, who planned to spend the weekend in his home district in Ohio. (…)
Meanwhile, some Senate Republicans have been talking about an alternative path that would allow passage of legislation extending current tax rates for income up to $250,000, while allowing the top rates to rise to Clinton-era levels.
“We’re realists from the standpoint that we realize we don’t have any real negotiating leverage in this process,” said Sen. Ron Johnson (R., Wis.). “We may be forced to acknowledge reality and say all we can do is limit the damage.”
These Republicans believe the party would have more leverage if it seeks spending cuts in exchange for approving an increase in the federal debt limit, which is expected to be needed by late February or early March. Republicans battled the White House over the debt ceiling in the summer of 2011, brinkmanship that led to the U.S. losing its pristine debt rating for the first time. (…)
Mr. Obama has said he will not negotiate with Republicans if they try to use the debt limit as leverage. Any such move by GOP leaders would set the stage for an even more contentious battle next year. (…)
Honeywell’s CEO gives the orders at the industrial giant, but lately has been taking directives from President Obama and congressional Republicans in hopes of finding a fiscal-cliff solution.
Mr. Cote (pronounced KOH-tee) is the business executive most in the middle of the fiscal-cliff debate. He and senior White House adviser Valerie Jarrett talk or email several times at all hours every day. At the other end of Pennsylvania Avenue, he visits congressional offices a couple of days weekly, bringing along other corporate titans and a newly funded CEO campaign for a deficit compromise.
Mr. Cote’s role shows a big change from last year’s messy and inconclusive debt-ceiling debate: Business leaders aren’t sitting on the sidelines this time. “We’re not confident that our guys can govern anymore,” says Mr. Cote, who switches out of the jeans he typically wears into a suit and tie when summoned by lawmakers.
He has received signals from both parties of possible compromises on the fiscal-cliff issues, about which Mr. Obama and House Speaker John Boehner met Thursday. Earlier in the day, Mr. Cote said he was getting “worried” that a sizable, credible deal was looking more difficult. His fear: It might be replaced by an “anemic deal requiring this country to keep fighting over these issues while the rest of the world becomes more competitive.” (…)
Small businesses on the right and safety-net groups on the left scoff that Mr. Cote, whose total direct compensation was $25 million last year, can afford to be magnanimous.
Small businesses are more sensitive to personal tax rates—the rates at which many are taxed, via their owners’ personal returns. That helps explain why small business is more closely aligned than big business with the GOP opposition to raising personal tax rates for anyone.
“A higher income-tax rate on us means we can’t invest in new equipment or personnel,” says Albert Macre, an owner of Triple Play Café in Steubenville, Ohio. “Maybe if I were making five to 10 million dollars a year like the big CEOs, I would be willing to pay higher taxes too.” (…)
President Obama named Mr. Cote to the Simpson-Bowles deficit-cutting commission in 2010. The role, Mr. Cote says, impressed him with the depth not only of the country’s fiscal but its political problems. Commission co-chairman Alan Simpson recalls a day after months of partisan warfare when Mr. Cote took off his coat and told the group: “Who are you people? Is this the way you do the nation’s business? I’d fire all of you.” (…)
EU summit delays crucial decisions Judgments on closer fiscal and economic integration put off
The two most controversial proposals put forward by European Council president Herman Van Rompuy – a future eurozone budget and binding economic reform contracts – were nearly stripped entirely from the summit’s communiqué. The document, published early on Friday morning, instead said the contracts would be presented as a “possible measure” in June.
Japanese business confidence slumps Manufacturers’ pessimism rises ahead of general election
The producer price index declined 0.8% last month, but the price for food jumped 1.3%, the largest gain since February 2011, a report Thursday from the Labor Department said.
Wholesale food prices have now risen for six consecutive months.
Producer food prices are up 2.6% from a year ago, compared with an annual gain of just 1.5% for all goods.
Prices for fruits, vegetables and pasta all increased last month, but the gains are most pronounced in animal products, as the impact of increased feed grain prices are now materializing.
Dairy products prices rose 2.1% last month and are up 4.7% from a year ago. Chicken prices have spiked 14.3% in the last year and wholesale beef and veal prices rose 8.2% in November, the largest monthly advance since 2008. (Chart from Haver Analytics)
EU Car Sales Reach 19-Year Low as Recession Hits Peugeot European Union car sales fell to a 19-year low, with French companies PSA Peugeot Citroen and Renault SA and Italian competitor Fiat SpA posting the biggest drops, as a recession in countries using the euro hurt demand.
Eleven-month registrations in the 27-nation EU fell 7.6 percent to 11.3 million vehicles, the lowest figure for the period since 1993, the Brussels-based European Automobile Manufacturers’ Association, or ACEA, said today in a statement. The decline was propelled by a 10 percent plunge in November.