Wednesday, December 26, 2012

Fiscal Cliff Deal Increasingly Unlikely Due to GOP Intransigence

If the nation goes over the fiscal cliff early next week it will be thanks to the intransigence of the House GOP and their only slightly less insane compatriots in the Senate.  Apparently, now totally lost in their own private alternate university the members of the GOP House caucus have not even returned to Congress after Christmas and seem only to happy to figuratively fiddle as Rome burns.  And the losers because of this GOP insanity?  Millions of working and middle class families among others.  As Politico is reporting, it looks as if no budget deal will be worked out even if the Senate and White House work strenuously.  Here are story highlights:

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.

Senate Democrats are drafting a fallback bill to resolve the crisis, but they have little optimism that Republicans will accept their proposals. The White House, a senior administration official said, is in close coordination with Senate Democrats. Late Wednesday, Reid’s office pushed Republicans to pass a bill to extend tax rates for income below $250,000.

The House sidestepped a decision Wednesday to bring the chamber back into session, putting the burden squarely on the Senate, where the stars will need to align for swift action in the next few days. Speaker John Boehner’s leadership team said bluntly: the “Senate first must act” before the House will consider additional legislation to avoid the cliff. So that they’re all on the same page, House Republicans will have a members only conference call Thursday.

Democrats also have good political reasons to hold out until after the New Year, when the new Congress convenes Jan. 3.  Democrats are slated to increase seats in both chambers in the next Congress -- with a robust 10-seat majority in the Senate, and the White House believes it has little incentive to cave to GOP demands ahead of the fiscal cliff.

To some, last week’s debacle in the House looked a lot like several of the near-misses from year’s past; most notably in 2008 when the Dow Jones Industrial Average dropped 778 points after the House rejected the initial version of the Troubled Asset Relief Program before the Senate ended up cutting a bipartisan deal to right the country’s finances.

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