The calendar says two days until we all fall off the fiscal cliff, but it’s really down to a few hours.
Where things stand now: Senate majority leader Harry Reid (D) of Nevada and his Republican counterpart, minority leader Mitch McConnell of Kentucky, are huddled with staff, trying to work out a deal to prevent that $600 billion mix of tax hikes and spending cuts set to kick in on New Year’s Day Tuesday.
Whatever Senators Reid and McConnell are able to negotiate presumably will make it through the Senate, where Democrats are in charge and where most Republicans are less vulnerable than House members to a challenge from the right in the 2014 mid-term elections.
More problematic is the GOP-controlled House, where a group of tea party Republicans stymied and embarrassed Speaker John Boehner by preventing his “Plan B” attempt to reach a deal with the White House.
Still, there are ways to get to “yes” – which include postponing some sticky issues.
As the Monitor’s Gail Russell Chaddock reported Saturday:
“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 does 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.”
When last heard from, all three principals – Reid, McConnell, and President Obama – expressed measured (very measured) optimism that the inexorable slide toward cliff’s edge could be halted, before automatic tax hikes kicked in for all Americans as millions of others lose the extended unemployment benefits that have kept them afloat through tough economic times.
But both Senate leaders face potential push-back from their own ranks.
“McConnell is unlikely to back a deal that wouldn’t win favor with House Republican leaders, though he eagerly wants a deal to take the revenue fight off the table so Congress can renew the battle over spending cuts when it comes time to raise the debt ceiling early next year,” Politico reported Sunday morning. “Reid, in the meantime, faces dueling pressure from some in his party who want a deficit-cutting deal immediately and other Senate Democrats who argue they’ll have a stronger hand in the next Congress if Washington goes over the cliff.”
Ever since he won reelection in November – running on a platform that included an increased tax rate for households earning more than $250,000 a year – Obama has had the stronger hand. Polls consistently show strong public support for raising taxes on the “millionaires and billionaires” Obama kept talking about. And most Americans are more inclined to blame congressional Republicans than they do Obama for the political hang-ups leading to the current fiscal cliff impasse.
Obama's approval rating is at a three-year high; Speaker Boehner's is at an all-time low, and a majority of Americans view the GOP as too extreme, polls show.
“They say that their biggest priority is making sure that we deal with the deficit in a serious way, but the way they’re behaving is that their only priority is making sure that tax breaks for the wealthiest Americans are protected,” Obama said. “That seems to be their only overriding, unifying theme.”
And he warned of the impact if we go over the fiscal cliff.
"Obviously I think business and investors are going to feel more negative about the economy next year,” he said. “If you look at projections of 2013, people generally felt that the economy would continue to grow, unemployment would continue to tick down, housing would continue to improve. But what's been holding us back is the dysfunction here in Washington. And if people start seeing that on January 1st this problem still hasn't been solved, that we haven't seen the kind of deficit reduction that we could have had had the Republicans been willing to take the deal that I gave them, if they say that people's taxes have gone up, which means consumer spending is going to be depressed, then obviously that's going to have an adverse reaction in the markets."