Congress’s Fiscal-Cliff Chaos: House Passes Last-Minute Deal
“You can always count on Americans to do the right thing—after they’ve tried everything else,” Winston Churchill once said. But even by that standard, the scramble to avoid the entirely predictable fiscal cliff at the last possible minute was an exasperating exercise that made sausage-making look good.
Despite 518 days to deal with the sequestration cuts and 12 years to anticipate the end of the Bush tax cuts, it took two late-night votes on the hinge of the New Year to stop Congress from kicking America’s economic recovery in the teeth. The Chinese must have been laughing, watching C-Span these last few days. This is not a textbook example how great nations govern themselves.
But as bad as it looked from the outside, the atmosphere in the corridors of Congress was even worse, according to staffers. With the sun setting on New Year’s Day, chaos was the order of the day inside the House Republican conference, when Majority Leader Eric Cantor came out against the Senate’s bipartisan bill to avoid the fiscal cliff. The complaint among conservatives was that spending cuts were absent from the last-minute deal.
That’s true—and irrelevant at this particular moment. All hope of a grand bargain evaporated when House conservatives undercut Speaker John Boehner’s attempts to negotiate with President Obama. House Republicans’ rational right to amend any bill ended when they hightailed it out of town to enjoy an extended Christmas vacation and kicked the responsibility for negotiations to the Senate.
The irony, of course, is that hard-core conservatives’ impulse to condemn any compromise ended up costing them a better, more comprehensive deal on overall deficit and debt reduction. The president had been offering entitlement reform, at the risk of angering his base. None was included in this package.
As it stands, the fiscal-cliff bridge—crafted largely by Vice President Joe Biden and Senate Minority Leader Mitch McConnell—represents a compromise on taxes that in saner times would be seen as a win for the center right, permanently extending tax cuts for 98 percent of Americans, fixing the onerous Alternative Minimum Tax by adjusting it for inflation, and taxing estates over $5 million at 40 percent—lower than just a few years ago. Revenue is going up, but not nearly as much as many liberals had wished. The AFL-CIO strongly opposed the measure.
But despite this, almost precisely two times the number of House Democrats supported the bipartisan Senate plan as Republicans. The final vote count was 172 Democrats in favor versus just 85 Republicans in favor, including Speaker Boehner. The no votes from Republicans totaled 151, while just 16 Democrats gave the Heisman.
'After the House passed the Senate's fiscal cliff bill, Obama warned Congress: the U.S. can't 'simply cut our way to prosperity.''
Now is not time for broad self-congratulation, however. We have essentially just moved the fiscal cliff two months. Yep, mark your calendar, we’re going to be at this again by March 1, when the one-two punch of the debt ceiling and sequestration cuts come due. The challenge will be to see whether the president and Republican leaders can come to some sort of agreement on entitlement reform, tax reform, and spending cuts in that period.
Obama discussed the challenge frankly in his post-vote statement in the White House briefing room, citing the need to reduce the deficit and specifically mentioning Medicare reform. But he also sent a clear signal that he would not allow Republicans to hold the nation’s full faith credit hostage with the debt ceiling, indicating a willingness to let them own the default if they insist on it. It was an emboldened Obama, expressing the lessons he learned in dealing with a conservative Congress in his first term.
As absurd as it may sound in the wake of such a narrow escape, the really tough political fights still lie ahead. Enacting specific entitlement reforms is much more difficult than debates about whether 98 percent of Americans should not have their taxes raised. And when it comes to tax reform, the lobbyists and the activist class will be out in full force.
The entire ugly scramble reminded us why Congress is the least popular American institution. It is fresh evidence for why 77 percent of Americans say the way politics works in Washington is causing serious harm to the country, according to a new USA Today/Gallup poll. There no doubt will be plenty more examples to drive that conviction home over the next two months.