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With Five Days Left, No Fiscal Cliff Deal In Sight

fiscalcliff1

The President and at least part of Congress are back in town today as the clock continues to tick down on the Fiscal Cliff and, at the moment, it really doesn’t look like we’ll be getting any deal done at all:

WASHINGTON (AP) — Lawmakers are engaged in a playground game of “who goes first,” daring each political party to let the year end without resolving a Jan. 1 confluence of higher taxes and deep spending cuts that could rattle a recovering, but-still-fragile economy.

President Barack Obama returns from Hawaii Thursday to this increasingly familiar deadline showdown in the nation’s capital, with even a stopgap solution now in doubt.

Adding to the mix of developments pushing toward a “fiscal cliff,” Treasury Secretary Timothy Geithner informed Congress on Wednesday that the government was on track to hit its borrowing limit on Monday and that he would take “extraordinary measures as authorized by law” to postpone a government default.

Still, he added, uncertainty over the outcome of negotiations over taxes and spending made it difficult to determine how much time those measures would buy.

In recent days, Obama’s aides have been consulting with Senate Democratic Leader Harry Reid’s office, but Republicans have not been part of the discussions, suggesting much still needs to be done if a deal, even a small one, were to be struck and passed through Congress by Monday.

As things stand, the odds of that happening don’t seem very good. The rejection of Plan B by what, in the end, was a minority of the House GOP Caucus, but enough of one to deny Speaker Boehner his needed majority, makes it unlikely we’ll see anything new from the House. Indeed, as of right now the House remains on recess subject to a 48 hour recall and most Members are not even in Washington at the moment. Yesterday, the House GOP Leadership said that any next steps need to come from the Senate. On some level seems seems to make no real sense. After all, the Constitution requires that any bill dealing with taxes originate in the House to begin with, and it’s fairly obvious that if by some miracle we did reach a deal before Monday the Senate would clearly not be the biggest legislative obstacle. The fate of any deal lives or dies based on what happens in the House. However, as Matthew Yglesias notes, there are political reasons behind putting pressure on the Senate:

The reason is that while anything Boehner and Obama agree to will easily pass the Senate, in the absence of an agreement it’ll be hard for Obama to get anything past the Senate. He’d need a lot of Republican votes to overcome a filibuster, and those votes would probably come through something like Gang of X talks between Republicans and squishy moderates like Kent Conrad and Joe Lieberman. Conrad wants to split the difference between the President’s last offer and Boehner’s last offer. Then once something like that difference-splitting bill passes the Senate, Boehner gets to take it up as the new baseline for negotiations and pull the ultimate resolution even further to the right.

But that’s exactly why Obama would be foolish to take any such thing seriously. Starting in the New Year, the Senate gets more liberal. The House also gets more liberal. And the policy baseline also gets more liberal. The White House isn’t going to pull the plug on negotiations, but unless Boehner comes back to the table with something new to say they have no incentive to further weaken their hand.

I’ve noted several times this months that the President has the upper hand in these negotiations largely because of the fact that the public supports his position on raising on tax rates on high income earners. If we do go over the fiscal cliff, then it’s highly likely that the first initiative the President will take when the new Congress convenes in just about a week will be to propose a bill that lowers taxes for all income below $250,000 per year. At that point, the GOP will find itself in an utterly impossible situation. Either they maintain loyalty to a tax pledge that makes no sense and vote against lowering middle class taxes, or they end up destroying their image even more than it already has been.  There are, assuredly, risks in going over the cliff for the President as well, most notably the chance that a resulting recession could end up overwhelming any domestic agenda for pretty most the entirety of his Second Term. In the long run, though, the GOP has far more to lose from this confrontation, although you wouldn’t know it from the way they’re acting.

At this point, I only see one of two alternatives playing out over the next five days. Either we watch both parties go through the motions of trying to make a deal when, in reality, they are merely preparing themselves for the battle to come in January, or they kick the can down the road a month or two and leave these problems for the 113th Congress to deal with. With only five days left, and the House of Representatives not even in session at the moment, I see no possible way that the parties will be able to reach a deal on the fiscal cliff itself.

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About Doug Mataconis
Doug holds a B.A. in Political Science from Rutgers University and J.D. from George Mason University School of Law. He joined the staff of OTB in May, 2010 and also writes at Below The Beltway. Follow Doug on Twitter | Facebook

Comments

  1. edmond says:

    And this is a bad thing because……?

    Like or Dislike: Thumb up 0 Thumb down 0

  2. john personna says:

    The stock market doesn’t seem too worried. The two likely explanations would be that (a) investors think a deal will be done, or (b) going over the cliff is already priced in.

    I favor ‘b,’ with the option of a minor sell-off as it actually happens.

    Like or Dislike: Thumb up 11 Thumb down 0

  3. MBunge says:

    @john personna: “The stock market doesn’t seem too worried.”

    That may be because the immediate effects aren’t terrible. It’s not like back during the credit crisis where, if the Very Important People were to be believed, if Congress didn’t do something the whole global lending infrastructure was going to implode within days.

    Mike

    Like or Dislike: Thumb up 0 Thumb down 0

  4. OzarkHillbilly says:

    The rejection of Plan B by what, in the end, was a minority of the House GOP Caucus, but enough of one to deny Speaker Boehner his needed majority,

    Will somebody please just put him out of his misery.

    Like or Dislike: Thumb up 5 Thumb down 0

  5. C. Clavin says:

    If I was a Republican House Member…that is if my IQ was significantly lower than it is…I would simply allow the Bush Tax Cuts to expire. Then everything you do from there is a tax cut. You haven’t voted for any revenue increases. Even if, as part of a Grand Bargain, the taxes on the wealthiest 1% go up…you didn’t vote for that. They can’t be pinned on you.

    Like or Dislike: Thumb up 11 Thumb down 0

  6. gVOR08 says:

    On it’s face, going off the “cliff” gives Obama the whip hand. (Image intended.) As Doug says, the Dems introduce a bill with tax cuts for almost everyone and whatever spending cuts they feel like. It can’t be that hard to peel off enough GOPs who are not crazy and/or want to run on massive tax cuts. The bill passes and the cuts will be known thereafter as the Obama tax cuts. Meanwhile, people will be realizing they like Obamacare, the GOPs will continue to obsess over other peoples sex lives, and Hillary will win by 10% in ’16; with coattails.

    So what the hey is the GOPs plan? Do they even have a plan? Are they so committed to never voting for a tax hike on their wealthy donors that they’ll guarantee tax hikes for their wealthy donors? I’m not seeing much about the debt ceiling except that we hit it on the 31st, and apparently the deal to cool it ’til after the election has expired. This is the one thing that gives the GOPs leverage. Are they going to play another round of give us what we want or we shoot the sheriff, while holding the gun to their own heads? Does Obama have a plan to flank them? Anybody have any insight?

    Like or Dislike: Thumb up 5 Thumb down 0

  7. Andre Kenji says:

    @john personna: The Stock Market is worried with getting more free money from the Fed, not with the so called fiscal cliff. By the way, there are some investors that thinks that something must be done with the deficit, and if that´s the only way that you can raise taxes and cut spending to deal with it, then, so it.

    Like or Dislike: Thumb up 4 Thumb down 0

  8. Andre Kenji says:

    By the way, the old cliche that Economics Predictions exists to make Astrology looks like to be reliable is up to the point. Most of these predictions prove out to be wrong.

    Like or Dislike: Thumb up 5 Thumb down 0

  9. Just Me says:

    My gut tells me the president actually wants to go over the cliff, so unless the house passes 100% exactly what the president wants, Reid isn’t voting for it and the president isn’t signing it.

    The democrats want the cliff because the electorate has already decided the GOP is to blame and the democrats have all the leverage now and when they go over the cliff.

    If the economy goes into the tank the GOP will continue to get the blame so it doesn’t particularly matter what happens at this point. Right now both sides are mostly making decisions best on what they think will hurt the other party rather than what will make things better.

    Right now here the democrats are painted as the perfection of innocence in all of the budget talks, but most of you conveniently forget that Reid and his democrat controlled senate haven’t bothered to pass a budget in 3 years. That isn’t because the GOP was threatening a filibuster-you can’t filibuster the budget.

    Like or Dislike: Thumb up 0 Thumb down 13

  10. David M says:

    @Just Me:

    Right now here the democrats are painted as the perfection of innocence in all of the budget talks, but most of you conveniently forget that Reid and his democrat controlled senate haven’t bothered to pass a budget in 3 years.

    Would someone please explain how a non-binding budget resolution matters? The GOP have been complaining about it for years now, without ever actually saying what it would have done.

    Like or Dislike: Thumb up 11 Thumb down 0

  11. C. Clavin says:

    Just Me whips out the “No Budget for 3 Years” meme.
    Oh My God…how have we carried on the business of the Nation for three years if we didn’t have a budget? We must be in total economic chaos with no budget for 3 years. Certainly Sandy Point is a result of not having a budget for 3 years…right?
    Bush had budgets. He also squandered a budget surplus.
    If your opinion is based on stupid stuff…then your opinion is…well, I think you see where I’m going with this.

    Highly-rated. Helpful or Unhelpful: Thumb up 19 Thumb down 1

  12. george says:

    @C. Clavin:

    If I was a Republican House Member…that is if my IQ was significantly lower than it is…I would simply allow the Bush Tax Cuts to expire. Then everything you do from there is a tax cut. You haven’t voted for any revenue increases. Even if, as part of a Grand Bargain, the taxes on the wealthiest 1% go up…you didn’t vote for that. They can’t be pinned on you

    I’ve been wondering about this too – and I wonder if this is what everyone has in mind. Let the Bush cuts expire, then negotiate new cuts.

    Like or Dislike: Thumb up 0 Thumb down 0

  13. @Just Me:

    Right now here the democrats are painted as the perfection of innocence in all of the budget talks, but most of you conveniently forget that Reid and his democrat controlled senate haven’t bothered to pass a budget in 3 years.

    If we haven’t had a budget for three years, it would appear they aren’t that important. The lack of a budget hasn’t stopped them from passing appropriations.

    Like or Dislike: Thumb up 13 Thumb down 0

  14. Just Me says:

    So basically Reid failing to do his job in the senate is okay, but the GOP does everything wrong?

    Spending is fine and dandy, and isn’t a part of the fiscal problem.

    Entitlements have nothing at all to do with how much money our government is spending and there is now way to cut or streamline expenses to make it better.

    The wealthy have too much money, so they can pay for all the entitlements forever, ,because taxing them will take care of all the spending.

    And the government doesn’t need to have a budget, because they know how to spend all the money anyway.

    Half my frustration in all these discussions is that the democrats apparently never spend too much money and always cooperate and always work with the GOP and would never do anything for pure political purposes.

    Reid is about as incompetent and unwilling to cooperate in his position as the GOP. Shoot he is the perfect hypocrite who absolutely didn’t ever want any kind of filibuster reform while he was the minority leader but sees it as great now that he is the majority leader (and the reality is filibuster reform was a good idea when he was in the minority).

    The problem here is that Washington is broken and the Democrats want to tumble over the cliff not because it is good for the American people but because the polls indicate it will hurt the GOP. Their motivations aren’t altruistic or even because they think it is best for the country-they just want more ammunition.

    Like or Dislike: Thumb up 1 Thumb down 10

  15. Ben Wolf says:

    @Robert Prather:

    If we haven’t had a budget for three years, it would appear they aren’t that important. The lack of a budget hasn’t stopped them from passing appropriations.

    A lot of people misunderstand that a budget is just an accounting structure. The form it takes is (within limits) optional and doesn’t have to come as a set piece.

    Like or Dislike: Thumb up 7 Thumb down 0

  16. JKB says:

    Starbucks has started a write-in campaign of “Come Together” on their cups. I first thought they were promoting for their customers to be considerate lovers. In any case,their efforts have nothing to do with expiring milk subsidies which might double the cost of the milk in their milk with a shot of coffee products they sell.

    Like or Dislike: Thumb up 2 Thumb down 1

  17. @Just Me: Where to begin. First, you set up a number of straw men: no one thinks that taxing the rich will fix our budget problems, especially not Medicare; likewise, no one thinks that entitlements have nothing to do with our budget problems, though they are a long term problem, not short term; spending is a problem, but revenue is the bigger problem.

    The reason Reid wants filibuster reform is because the Republican have abused it. Reid has faced more than 300 filibusters since 2006. When Lyndon Johnson was majority leader in the late 50s, for six years, he faced only one. That is abuse. The Republicans have a mercenary way of playing politics.

    The Democrats probably want to go over the cliff because it helps them get a better deal and it will allow Republicans vote for a tax cut rather than an increase.

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  18. David M says:

    @Just Me:

    Democrats want to tumble over the cliff not because it is good for the American people but because the polls indicate it will hurt the GOP.

    That would seem to be contradicted by all evidence available.

    Like or Dislike: Thumb up 4 Thumb down 0

  19. Ben Wolf says:

    @Just Me:

    The problem here is that Washington is broken and the Democrats want to tumble over the cliff not because it is good for the American people but because the polls indicate it will hurt the GOP

    It isn’t a cliff, but a gradual slope. Going past the summit won’t immediately damage the economy, though it will inflict increasing hardship as time progresses. I’m glad you’ve come around to acknowledging that austerity is the last thing we need right now.

    Like or Dislike: Thumb up 9 Thumb down 0

  20. An Interested Party says:

    The whining about the lack of budgets and how the poor Republicans are being blamed for everything is so touching…but the GOP really does have only itself to blame for this mess…Republicans knew the Bush tax cuts wouldn’t be permanently approved which is why they had to sunset them and they certainly didn’t mind squeezing the President to get them extended…were the people who are whining now whining then? Republicans were also the ones who agreed to the whole fiscal cliff deal in the first place so now really isn’t the time for anyone to be whining for them…

    Like or Dislike: Thumb up 11 Thumb down 0

  21. Woody says:

    The House GOP wants to go over the cliff far more than the Democrats do.

    The extremist wing of the House Republicans will thus be able to vote for a tax cut, thereby protecting themselves from a primary battle in 2014.

    Still, based on recent history, the Senate Democrats will figure out a way to bungle a political straight flush. Kent Conrad, of course, will lead the way.

    Like or Dislike: Thumb up 6 Thumb down 0

  22. michael reynolds says:

    I’m not so sure the Republican brand can be any more damaged. Freedom’s just another word for nothin’ left to lose, right? What’s the downside for them? That they will have a hard time getting re-elected? 90% of them are in such gerrymandered districts that to lose they’d have to be caught — as the old saw goes — in bed with a live boy or a dead girl. Everyone with a functioning cerebrum already holds the GOP in contempt, so what’s a bit more?

    The damage is to GOP Senators, about which the House could not care less. Or to prospects for a GOP presidential candidate in 2016. But the GOP has begun to absorb reality and they don’t think they can win in 2016. Not against Hillary, and probably not against Cuomo or McCaskill.

    So, what’s going to provide their ‘come to Jesus’ moment? They don’t care about the country or the economy, so that won’t be it. THey’d actually like to see the economy crash. So what’s the leverage on these people?

    Like or Dislike: Thumb up 10 Thumb down 0

  23. Argon says:

    @Just Me:

    So basically Reid failing to do his job in the senate is okay, but the GOP does everything wrong?

    The House passes a crazy bill that differs significantly from the one that gets passed through the Senate (with a modern requirement of 60+ votes these days). The Senate version requires significant bipartisan negotiating to avoid the overused filibuster. The House version is pure wingnuttery and the House negotiators are not willing to back down. Reid looks at McConnell who didn’t work in good faith and Boehner, who couldn’t deliver the goods. Reid then says, ‘The Hell with that. Stop wasting my time.’ and clamps the bill in reconciliation.

    Then someone like Mataconis pulls a ‘both sides do it’ argument out of their derrieres, all the time forgetting that today’s GOP have been the most intransigent bunch *ever*, halting practically all legislation that didn’t meet *their* positions at least 99%.

    Like or Dislike: Thumb up 13 Thumb down 0

  24. stonetools says:

    @Just Me:

    The problem here is that Washington is broken and the Democrats want to tumble over the cliff not because it is good for the American people but because the polls indicate it will hurt the GOP. Their motivations aren’t altruistic or even because they think it is best for the country-they just want more ammunition.

    The problem is that during the last four years, the GOP has been the most willfully obstructionist opposition party in US history. The public was willing to give the Republicans the benefit of the doubt up to the 2011 debt ceiling “crisis” but then it became crystal clear to all but the most conservative ideologues ( folks like you) that the Republicans were the ones responsible for the current impasse.
    The public now feels not that Washington is broken but rather than the Republican Party is broken and so they are going to (rightly) blame the Republicans for the current mess. That’s not the Democrats’ fault-the Republicans BUILT that.

    Like or Dislike: Thumb up 5 Thumb down 0

  25. Tsar Nicholas says:

    Seems as though they’ll let the Bush tax cuts expire and then turn right around and reinstate them for those making not too mucho beaucoup dinero, if you catch my drift. Then the media-Dems-Obama can portray themselves at the hero of the middle classes. And the “Tea Party” crowd can say, with straight faces, they never affirmatively voted for a tax hike. The end result will be the same. Very high wage earners will be hosed. Liberals on the Internet and still in school will celebrate. Wealthy liberals will set up their next offshore tax shelters. Large numbers of people on Main St. will be laid off. C’est la vie.

    Ultimately the prospects are grim. The government spends far too much money. Social Security and Medicare are off budget items and are heading down the drain. Gen. Y largely is unemployable. Once Social Security goes bust this present “fiscal cliff” will look like an ADA ramp at a preschool. Interest rates won’t stay this low forever. Inflation inevitably will rear its ugly head. Unless you’re making iPhones or drilling for oil the economy is in the crapper. Obamacare already is causing large numbers of people to be shifted from full to part-time employment or jettisoned entirely.

    Even if they cut a deal it won’t end well. If the U.S. were a car it’d be sent to the scrap heap.

    Like or Dislike: Thumb up 0 Thumb down 3

  26. Ron Beasley says:

    @Woody:

    The extremist wing of the House Republicans will thus be able to vote for a tax cut, thereby protecting themselves from a primary battle in 2014.

    Don’t count on it. Read This:
    Triumph of the Tea Party mindset
    These people are suicide bombers and would rather blow up themselves and the country thyan give an inch.

    Like or Dislike: Thumb up 3 Thumb down 0

  27. michael reynolds says:

    @Ron Beasley:
    I tend to agree, as I wrote above. Given that Tea Partiers don’t really care about the economy or the country or anything beyond their own cretinous faith, they’re quite capable of preferring economic ruin rather than behaving rationally.

    These are the people Doug hailed as useful contributors to the GOP, the party to which James Joyner still belongs.

    Like or Dislike: Thumb up 3 Thumb down 0

  28. Andre Kenji says:

    @Robert Prather:

    The reason Reid wants filibuster reform

    Reid does not want filibuster reform. If he really wanted to do it then he would have done it years ago. There are a bunch of Junior Democrat Senators(Mark Warner, the Udall Cousins, Jeff Merkley, Elizabeth Warren, among others- including Senator elect Angus King, an independent that could choose to caucuses with the Republicans in Future) that REALLY want Filibuster Reform and are demanding it from Reid.

    But unless Reid takes action, I´ll say that he wants the filibuster as it is. In part not only because the Democrats may be in the Minority in the future, but because the filibuster is helpful to Democrats in Red States even when they are in the majority. They help them to flee from difficult votes. Few people remember that Robert Byrd and Byron Doorgan filibustered Immigration Reform(But, then, Republicans WANTED to be blamed for it).

    Like or Dislike: Thumb up 3 Thumb down 0

  29. bill says:

    @Ron Beasley: ever hear of violence at a t-party rally? they’re mostly semi-successful business owners who like to see that their taxes are spent wisely, despite the “armed militia” image that seems to jump into the uneducated mind.
    but here’s some history to chew on while pointing fingers;
    – the “unpatriotic” speech about running $trillion dollar deficits
    – the dreaded “i’ll cut the deficit in half” promise.
    – the inability to actually “preside” over the house/senate, reason #1 why this cliff nonsense is still in the news.
    – just the fact that he’s rallying for the Bush tax cuts instead of having something with his name on it. how many democrats were lauding them back in the day? really?

    Like or Dislike: Thumb up 0 Thumb down 8

  30. Just Me says:

    I am not arguing that the GOP is innocent, I am just sick of this idea that the democrats are paragons of virtue who always compromise and don’t do anything for pure political reasons.

    Reid is as much a problem as McConnell. Reid wasn’t “Mr. Let’s all work together” when the democrats were in the minority so not sure why he is declared to have no role in the current problems.

    The structure in DC currently is to obstruct and it didn’t start in 2008.

    Like or Dislike: Thumb up 0 Thumb down 7

  31. anjin-San says:

    It’s a beautiful day in Berkeley, hanging out on Telegraph, thinking of ways to stick it to the man. I’m going to buy sme hippie posters from the collectivist sixties, then hit Moe’s Books. The problems in DC seem very far away.

    Like or Dislike: Thumb up 5 Thumb down 0

  32. bk says:

    @bill:

    ever hear of violence at a t-party rally?

    Why, yes I have.

    Like or Dislike: Thumb up 3 Thumb down 0

  33. bk says:
  34. OzarkHillbilly says:

    I passed a whole lot of comments to say this:

    Shoot me now. I am tired of being a hostage. Shoot me now. Please.

    Like or Dislike: Thumb up 0 Thumb down 0

  35. bk says:

    This is the funniest thing that I have seen all day. Anywhere.

    (regarding Tea Party rally attendees)

    they’re mostly semi-successful business owners who like to see that their taxes are spent wisely

    Like or Dislike: Thumb up 6 Thumb down 0

  36. Woody says:

    umm . . . bill, “militant” does not mean “violent”. As for “tax money spent wisely”, I’ll believe that when I read about extremist rightwing Republicans openly call for an audit on the Department of Defense.

    As for Just Me, I enjoy watching you dissemble on Morning Joe. You are Barnacle, right?

    Like or Dislike: Thumb up 3 Thumb down 0

  37. An Interested Party says:

    If the U.S. were a car it’d be sent to the scrap heap.

    And if your life depended on your predictions, someone would have slit your throat long ago…

    ever hear of violence at a t-party rally? they’re mostly semi-successful business owners who like to see that their taxes are spent wisely, despite the “armed militia” image that seems to jump into the uneducated mind.

    Who could have guessed that so many alleged “semi-successful business owners” were sitting around collecting Social Security checks and depending on Medicare for their health problems…yet these are the same people who supposedly want to see their taxes spent wisely, which is code for spending taxes on them and not other people…

    I am not arguing that the GOP is innocent, I am just sick of this idea that the democrats are paragons of virtue who always compromise and don’t do anything for pure political reasons.

    Oh, in other words, you’re sick of a strawman…

    Like or Dislike: Thumb up 2 Thumb down 0

  38. bk says:

    they’re mostly semi-successful business owners

    Maybe they’re Hoveround dealers.

    Like or Dislike: Thumb up 5 Thumb down 0

  39. David M says:

    @Just Me:

    I am not arguing that the GOP is innocent, I am just sick of this idea that the democrats are paragons of virtue who always compromise and don’t do anything for pure political reasons.

    No one is arguing the Democrats are perfect, just that they are much more willing to compromise than the GOP. Remember, the standard GOP position is “no tax increases ever, and plenty of unspecified spending cuts”. The standard Democratic position is not “no spending cuts ever, and unspecified tax increases”. There is one party willing to address the fiscal problems we face and it’s not the GOP.

    Reid is as much a problem as McConnell. Reid wasn’t “Mr. Let’s all work together” when the democrats were in the minority…The structure in DC currently is to obstruct and it didn’t start in 2008.

    The 60-vote Senate did start in 2009 though, no one that has paid attention over the last decade seriously argues otherwise.

    Like or Dislike: Thumb up 5 Thumb down 0

  40. Just 'nutha ig'rant cracker says:

    @michael reynolds: Doug still belongs, too. I don’t buy that “a pox on both their houses” bloviation for a minute.

    Like or Dislike: Thumb up 2 Thumb down 0