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Posted by on Dec 31, 2012 in Economy, Featured, Politics | 23 comments

Get Ready to Fall Off the “Fiscal Cliff”

Pat Bagley, Salt Lake Tribune

NOTE: The latest is that an agreement is close — but no vote today. Which means: yep, seguro que si — the United States, no matter for how long, is going off the fiscal cliff. A deal not voted on by the deadline is effectively no deal in time. And so I’m REPOSTING and READATING THIS:

Here’s what was posted several days ago. The bottom line: no vote to keep us from tumbling off the cliff will come today.

Get ready, by all signs it’s gonna happen. We’re going off the fiscal cliff — in a Congress-created mechanism that (wrongly) assumed politicos would do the right thing and compromise rather than risk draconian measures that Congress itself set in place as a kind of Sword of Damacles.

In the short term and medium term, politicians and partisans will assign the blame, and historians will likely agree with some of that analysis.

But in the long term historians will likely conclude that Washington today typifies the old joke that Jesus could not have been born in Washington “because they couldn’t find three wise men.” This story says it all:

Nearly all the major players in the fiscal cliff negotiations are starting to agree on one thing: A deal is virtually impossible before the New Year.

Unlike the bank bailout in 2008, the tax deal in 2010 and the debt ceiling in 2011, the Senate almost certainly won’t swoop in and help sidestep a potential economic calamity, senior officials in both parties predicted on Wednesday.

With the country teetering on this fiscal cliff of deep spending cuts and sharp tax hikes, the philosophical differences, the shortened timetable and the political dynamics appear to be insurmountable hurdles for a bipartisan deal by New Year’s Day.

Hopes of a grand-bargain — to shave trillions of dollars off the deficit by cutting entitlement programs and raising revenue — are shattered. House Republicans already failed to pass their “Plan B” proposal. And now aides and senators say the White House’s smaller, fall-back plan floated last week is a non-starter among Republicans in Senate — much less the House.

On top of that, the Treasury Department announced Wednesday that the nation would hit the debt limit on Dec. 31, and would then have to take “extraordinary measures” to avoid exhausting the government’s borrowing limit in the New Year.

And so we’ll go off the cliff — driven off the cliff. Driven by partanship and politicians more fearful of keeping their seats than keeping what by all signs is a fragile recovery going.

(Your tax dollars at work..)

UPDATE: To temper my analysis with another. I have great respect for Time’s Mark Halperin as an analyst. Here’s what he writes this morning — which also suggests we need to put on our parachutes (which by the way won’t work when you fall off a cliff):

At this point, even if Mitch McConnell wants to lead a last-second deal, it might not be possible. But his backing is certainly a necessary condition.

One of the biggest factors right now: the momentum and pressure for a compromise from cliff-adverse CEOs has dissipated. With the exception of the Gentleman from Starbucks, most other business shoguns are off on holiday, not focused on the Beltway. Republican leaders aren’t facing too much deal-or-no-deal cross currents now.

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