With Five Days Left, No Fiscal Cliff Deal In Sight
With less than a week left, the odds of a deal to avert the "Fiscal Cliff" seem longer than ever.
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.