Ah, the $600 billion question.
There are some in both parties who think going over all or part of the cliff is a good thing. Democrats argue that it will put the pressure on the GOP to vote to raise taxes, Republicans say it may be the only way to get the spending cuts they were promised as part of the debt-ceiling deal.
But both Democrats and Republicans have plenty to hate about the cliff and plenty of incentive to make sure the economy doesn’t take a full dive.
There are many reasons to be hopeful about a solution. Leaders in both parties have sounded conciliatory notes since Election Day, with both Democrats and Republicans careful to not “take anything off the table” before engaging in serious negotiations.
The threat of having a recession hung around either party’s neck, the fact that both parties recognize the sequester cuts are terrible policy, and the fear of a stock market collapse or an interest-rate driven hit to the nation’s long-term financial condition amount to a tremendous impetus for both sides to work together.
At most, lawmakers will break all expectations and offer up a “grand bargain” – a deal that cuts federal debt by something like $4 trillion during the next decade and sets up a process to reform the tax code in the process. Getting to that big of a deal in a few post-election weeks is, however, a tall order.
At a minimum, then, Washington lawmakers could produce a small “down payment” of deficit reduction in the lame-duck session of Congress in order to show ratings agencies and investors that they are serious about deficit reduction. Then, they’ll outline goals for entitlement and tax reform to be completed in 2013.
And those fights – entitlement spending and changes to the tax code – may make America yearn for the comparatively peaceful arguments about the fiscal cliff.
