Three (thin) reasons why Congress could yet avoid the fiscal cliff
A deadline, the promise of a House vote on whatever the Senate can produce, and a sharp reaction on Wall Street boost prospects that gridlocked lawmakers will act to avert at least some aspects of the fiscal cliff by Jan. 1.
With just three days to the fiscal cliff, it’s down to the Senate – which has not passed a budget in three years – to find a way out in time for a vote on New Year’s Eve.Skip to next paragraph
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Yet, despite a culture of failure that has settled on Washington like an ice storm, there are 11th hour pressures that could drive Congress to avert at least some elements of the “fiscal cliff” set to begin Jan. 1, including a week-long sell-off on Wall Street and a rare pledge that the GOP-controlled House will allow a vote on whatever the Democrat-controlled Senate produces.
“We just can’t afford a politically self-inflicted wound to our economy,” said President Obama in his weekly radio address on Saturday. “The economy is growing, but keeping it that way means that the folks you sent to Washington have to do their jobs.”
Ever since the 2011 debt-ceiling crisis, the focus of efforts to come up with a deficit-reduction plan has been private talks between President Obama and House Speaker John Boehner (R) of Ohio. Those efforts collapsed last week after a critical mass of GOP conservatives rejected Mr. Boehner’s “Plan B” to exclude incomes over $1 million from an extension of the Bush-era tax cuts.
Now, it’s up to Senate majority leader Harry Reid (D) of Nevada and minority leader Mitch McConnell (R) of Kentucky, seasoned veterans at partisan floor maneuvers to thwart the other side, to switch gears and rally support for a bipartisan deal, especially finding an acceptable cut-off point for extending the Bush tax cuts.
There are other elements of what has come to be known as the fiscal cliff – a $600 billion mix of tax hikes and spending cuts set to take hold on Jan. 1 – that may be postponed in the rush to an 11th hour agreement.
These include $110 billion in mandated spending cuts, known as the "sequester," unemployment benefits set to drop back to 26 weeks from a current 99 weeks, the end to a $5 million exemption for the estate tax, and a "patch" to the alternative minimum tax, set to hit some 40 million families, if Congress not act. Also on the table: a hike to the debt ceiling, now set to be breached early on Dec. 31, which the Treasury says can be delayed for weeks by emergency measures.
In a White House meeting with congressional leaders on Friday, President Obama restated his goal of extending tax breaks only for family incomes below $250,000. But in negotiations with Boehner, the president had proposed raising that threshold to $400,000 – a level endorsed by many Senate Republicans and likely to win the support even of some Tea Party conservatives.