It's just a matter of who blinks first. Both sides have aggressively laid down opening demands for budget talks that begin Friday at the White House. President Barack Obama would raise taxes on households with annual incomes over $250,000. Republicans wouldn't — and insist federal deficits must be restrained mostly by federal spending cuts, including benefit programs.
Neither side wants to see the government go over the cliff on Jan. 1, when a mountain of tax breaks expire and automatic spending cuts kick in, absent congressional action. That could hurl the economy back into recession. "I'm open to new ideas," said Obama, fresh from his re-election victory. House Speaker John Boehner sees a new "spirit of cooperation."
Thus, Republicans say they could accept some increase in tax revenues — but only by trimming deductions and loopholes. And Democrats are OK with more spending restraint — so long as benefit programs like Medicare and Social Security are protected. It's a dangerous game.