Fiscal Cliff: Signs of Progress — or Not?

Aislin, The Montreal Gazette

I’ve been hoping that THIS POST I did would be proven wrong so I could say at the outset of a post: “I was wrong.” Reports now suggest that it may be prove to be a wrong conclusion — but others suggest the new reports might prove misleading. The Politico reports progress:

Senate Minority Leader Mitch McConnell (R-Ky.) and Vice President Joe Biden engaged in furious overnight negotiations to avert the fiscal cliff and made major progress toward a year-end tax deal, giving sudden hope to high-stakes talks that had been on the brink of collapse, according to sources familiar with the discussion.

McConnell and Biden, who served in the Senate together for 23 years, are closing in on an agreement that would hike tax rates for families who earn more than $450,000, and individuals who make more than $400,000, according to sources familiar with talks. That would mark significant concessions for both men, particularly for McConnell. President Barack Obama campaigned on raising taxes for families who make more than $250,000, but McConnell has long been dead-set against any tax increases, warning they would jeopardize the economy.

This is actually how American politics traditionally operated: in most cases, neither side gets all they want, but in the end each side sells the final piece of legislation to their side and what emerges is national consensus. America’s politicos are far from that right now. If this is the deal that emerges, progressives will be upset at Obama; some Republicans will be upset at McConnell (and talk show hosts may battle it and urge their listeners to call Congress). MORE:

However, there has been no agreement over “turning off” the sequester, tens of billions of dollars in spending cuts that will hit the Pentagon and other federal agencies beginning on Jan. 2, the sources said.

The last-ditch horse-trading underscored the urgency of the situation because if no deal is reached, every income group will be hit with a tax hike starting Tuesday.
Crucial conversations between Biden and McConnell occurred early Monday morning, at 12:45 a.m. and 6:30 a.m., aides said.

The vice president and the Senate minority leader only began talking Sunday, after negotiations between Senate Majority Leader Harry Reid (D-Nev.) and McConnell sputtered.

Sources close to the talks said a deal is now more likely to come together but cautioned that obstacles remain, including how Speaker John Boehner and House Republican leaders react to any tentative agreement. Boehner has vowed to bring any bill the Senate passes to the House floor, but House Republicans could amend the package, which would throw any agreement into flux.

But then there’s this from Time’s Mark Halperin:

The most ominous moment of the day so far just might have been when Republican Congresswoman Shelley Moore Capito on CNBC this morning basically said she didn’t give a tinker’s darn about the President’s adamant position that he won’t negotiate over raising the debt ceiling. The Gentlelady from West Virginia also suggested that she thought Tim Geithner had effectively started the clock on the debt limit countdown in the last few days not on the merits and facts but to help the White House gain political advantage.

Why are these comments, to the extent they are representative of the House conference overall (which I think they are), so dangerous? First, because they suggest (as if more proof were needed…) that relations between the administration and House Republicans are as poisonous as ever. Second, because it means that even if there is a mini-deal in the next few days, the road ahead in the next few weeks and months will be equally — or more — gruesome.

NBC’s First Read puts it into perspective:

** But are we close to a deal? All that said, Senate Minority Leader Mitch McConnell and Vice President Biden are very close to a deal. According to a source with knowledge of the negotiations, Biden is offering McConnell raising tax rates on income above $400,000-plus and an up-or-down vote on the estate tax in return for unemployment insurance and having the sequester offset by some of the increased revenues. (Folks, this is VERY similar to deal that President Obama offered House Speaker John Boehner, but from which Boehner walked away.) From what we understand, McConnell wants a deal — he wants to get this tax issue off the table. So they are close. The question is whether Boehner would bring such a deal to the floor and whether it could pass in time. But if a Biden-McConnell deal gets 70 or more votes in the Senate, Boehner might not have no choice but to bring the legislation to the House floor.

AND:

*** Why we are possibly headed off the cliff: So it’s possible Congress could still come to some kind of agreement, but it’s always been a likely outcome that we’re headed to go off the so-called fiscal cliff. The reason: It’s become the easiest — and safest — path for both sides; NBC’s Mike Viqueira has called it the “inertia scenario.” For Democrats, going over the cliff ensures the elimination of the Bush tax cuts, and it gets them the tax revenue they’ve been demanding without having to give up a thing. What’s more, Democrats probably hold the upper hand if we go off the cliff, given all the polling suggesting that the American public would blame Republicans more than Democrats. For Republicans, having the Bush tax cuts expire means they don’t have to vote to raise taxes and thus break any tax pledge. Instead, beginning in the New Year, they get to vote to lower them for the middle class (the income threshold TBD).

AND:

*** Why that would be missed opportunities for both sides: But if we go over the cliff — the combination of tax increases and spending cuts set to commence after today — it will be a missed opportunity for both sides, too. For President Obama, it will be evidence that the GOP “fever” that he said would break after his re-election hasn’t come close to ending yet. In addition, it would signal that the second-term agenda he’s pursuing (immigration, energy) probably isn’t going anywhere. For Republicans, going over the cliff means that they’re giving up revenue without getting anything in return like spending cuts and entitlement reform, both of which Obama was willing to offer. Republicans believe that they’ll be able to extract those things in a future showdown of the debt ceiling, but we’re unsure that the White House or, more importantly, the business community is willing to play that game in 2013.

Note the operative word here: “game.”

Clearly the sticking point will remain:

The House.

And its Tea Party influence and penchant for being influenced by talk show hosts.

So there could be an agreement that passes the Senate, and the House.

Or we could (again) see the House dig in its heels and show itself (again) to be a House of ideologues rather than a house representative of the overall election results, national polls — or even the will of Republicans in the Senate.

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