Reading Jon Weisman in the NYT this AM, the question re the fiscal cliff is less “are we going over?” and more, “do I attach a parachute or a bungee cord?”
There are definitely folks trying for a last minute deal of the type the President outlined on Friday:
–extend tax cuts on 98% of households; allow expiration for top 2% over $250K;
–suspend sequester (i.e., shut off automatic spending cuts)
–extend unemployment insurance, patch AMT and doc fix (I think that’s right on those last two–the latter refers to scheduled negative spike in payments to docs who see Medicare patients).
But the politics may be insurmountable. Even if Senate R’s wants to go there, the only way I see this passing in the House is if Rep Boehner decides he’s willing to avoid the cliff by teaming up with Democrats (i.e., he allows a vote on a compromise to proceed and it passes with majority D’s). This seems an unlikely option when his alternative is to wait a few days until after we go over, when agreeing to much the same deal is scored as a big tax cut (since tax rates will have reset by then). Silly, if not crazy, I know…but there it is.
As a senior Senate aide, a D, says in the Weisman piece:
“It’s hard to overstate how little is going on,”…indicating what most lawmakers say in private: the country is likely to miss the Jan. 1 deadline.
If they then quickly pass a stopgap like the one the President trotted out on Friday, then it’s a bungee jump that doesn’t do much real economic damage, though markets may bounce around in unsettling ways for a few days. If it’s pure chaos and it looks like there’s no political path back up to the cliff, then we really will be threatening to damage the fragile recovery.
Either way, it’s political malpractice, and no…it’s not a pox on both their houses…it’s a pox on one House, and on one side of that House.