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Pivoting to the Fiscal Cliff

Chris Maddaloni/CQ Roll Call

Obama phoned Boehner and Reid  to discuss the fiscal cliff situation. He also placed calls to House Minority Leader Nancy Pelosi (D-Calif.) and Senate Minority Leader Mitch McConnell (R-Ky.), according to the White House.

Reid and Boehner were also on different pages today regarding the timing of a possible fiscal deal. While Reid said enough work has been done to allow action during the post-election session that begins next week, Boehner and other Republicans favor a short-term deal laying the groundwork for a broader solution  next year.

“We won’t solve the problem of our fiscal imbalance overnight in the midst of a lame-duck session of Congress,” Boehner said today. “And we certainly won’t solve it by simply raising tax rates or taking a plunge off the fiscal cliff.”

While a major tax overhaul would likely be beyond the scope of a lame-duck session, the chairmen of the Congressional tax-writing committees said today they are ready to work on such a project.

“We need to put progress ahead of politics and work towards a compromise that provides some certainty to American families and businesses,” said a statement from Senate Finance Chairman Max Baucus (D-Mont.), who would be Reid’s point man on any rewrite of the tax code. “We need to craft a proposal that supports jobs, expands opportunity and puts America’s economy back on track.”

Similarly, House Ways and Means Chairman Dave Camp (R-Mich.) said in a statement that a tax overhaul that avoids raising rates could be a victory for both parties.

“There is bipartisan support for tax reform that closes loopholes and lowers rates,” he said. “I believe the House and Senate are prepared to act next year on reform, and that not only means a fairer tax code and more jobs, but also more revenue to help solve our nation’s debt and deficit problems.”

A tax overhaul modeled on the 1986 law would run into resistance from some Democrats unless it raised revenue needed to head off cuts in federal programs.

“We must reduce the deficit, which is strangling our economic growth,” Senate Democratic Conference Vice Chairman Charles Schumer (N.Y.) said before the elections. “And we must seek to control the rise in income inequality, which is hollowing out the middle class.”

 Schumer argued in an Oct. 9 speech that a tax overhaul without effective increases in taxes paid by upper-income taxpayers would not help solve those problems.

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