The fiscal-cliff impasse had its roots in—where else?—the old South, with its lunatic blend of obstructionism and greed at the public trough, writes Michael Tomasky.
While most liberals were stewing at Barack Obama yesterday for his “capitulation” on tax rates, I confess that I was feeling philosophical about it, and even mildly defensive of him. He is negotiating with madmen, and you can’t negotiate with madmen, because they’re, well, mad. I also spent part of yesterday morning re-reading a little history and reminding myself that rascality like this fiscal-cliff business has been going on since the beginning of the republic. So now I’d like to remind you. It’s always the reactionaries holding up the progressives—and usually, needless to say, it’s been the South holding up the North—and always with the same demagogic and dishonest arguments about a tyrannical central government. We’ll never be rid of these paranoid bloviators, and if no other president could stop them I don’t really see why Obama ought to be able to.
(L) portrait of Alexander Hamilton and (R) James Madison (Bettmann/Corbis)
This history of legislative hostage-taking begins with the odious three-fifths compromise, which counted slaves as three-fifths of a person for census purposes. That much I trust you know. What you may not know is that the Southern states, backers of the three-fifths rule in this case in order to get greater representation in the House of Representatives, had opposed a different three-fifths rule earlier, back in the Articles of Confederation days. Then, three-fifths of all slaves were going to be counted for purposes of deciding how much federal tax each state owed.
In other words, the South had said, count slaves as part human for the purposes of taxation? Nevah! Count them as part-human for the purposes of representation, however—well, Yankee, now you’re talking. The South is still doing exactly the same thing today, never paying its freight, its cornpone pols inveighing against the evil government while the Southern states are collectively the most dependent on Washington largesse of all states and regions. The hypocrisy has a long pedigree.
Just three years after the three-fifths compromise we had the so-called Great Compromise of 1790, or the “dinner table bargain” mediated by Jefferson between Hamilton and Madison. Hamilton wanted the federal government to assume the states’ debts and establish public credit. Madison was dead set against it, partly on the grounds that his state of Virginia would be a big loser in any such assumption. This was true, but it also put Madison squarely against progress: against the government protecting investment capitalism, against the industrial revolution itself.
Fortunately, Jefferson brought them together, and equally fortunately, Madison was no John Boehner. He agreed not to support but also not to openly oppose Hamilton’s bill, on the condition that a new nation’s capital were built in some agrarian spot, which turned out to be a certain parcel along the Potomac River between Maryland and Virginia.
This one sort of worked out, because the men involved were actual statesmen, and each side got something meaningful. But usually, American history is the history of positive developments being prevented from happening, or at least perverted, because of hostagelike demands made by the reactionaries.
Thus could California become a state in 1850, and a free one, but only provided that the Northern states would accept a much strengthened Fugitive Slave Act, which non-slave states had tried to challenge (a reactionary Supreme Court ruled with the South in 1842), and provided that the federal government would assume Texas’s crushing debt. Thus did we get Bleeding Kansas, the little precursor to the Civil War. And so on and so on.
Must stick around until deal is reached.
House Republicans better hold off on the champagne, as they’ll be ringing in the new year at the Capitol Building. House Speaker John Boehner held a closed-door meeting with members this afternoon to brief them on the McConnell-Biden fiscal cliff deal and told them not to go far from Capitol grounds for the rest of the night. The House GOP is waiting on the Senate to finalize an agreement and has been told to “stick around and stay sober—semi-sober, anyhow,” said Texas Representative John Carter. As for the details of this potential deal, Representatives were given very few specifics.
Senators overwhelmingly approve a bill to avoid most tax hikes after the fiscal cliff deadline passes. Howard Kurtz on why it happened and the measure’s chances in the House.
A mad Washington scramble went into overtime in the predawn hours of New Year's Day as the Senate voted to avoid a tax hike on people making less than $400,000 even after the country had technically slid off the much-feared fiscal cliff.
Speaker of the House John Boehner, R-Ohio, walks to a closed-door GOP caucus as Congress meets to negotiate a legislative path to avoid the so-called "fiscal cliff" of automatic tax increases and deep spending cuts that could kick in Jan. 1., at the Capitol in Washington, Sunday, Dec. 30, 2012. (J. Scott Applewhite/AP)
While no one was breaking out the bubbly and party hats, this was as close to a Beltway triumph as our bitter and polarized politics is able to produce these days. And the bill does little in terms of spending cuts beyond kicking the can a bit down the road.
The 89 to 8 vote, on a deal brokered by Vice President Biden with Senate Republican leader Mitch McConnell, now must be approved by the House in the next two days. Given the margin in the Senate, where only five Republicans opposed the legislation, the pressure on John Boehner's team to push the ball over the finish line will be enormous. Yet substantial defections among conservative lawmakers are likely, which would force Nancy Pelosi to produce enough Democratic votes to pass the measure.
President Obama welcomed the Senate vote, and in purely political terms, the middle-of-the-night deal has to be seen as a partial victory for him. He got most Republicans to vote for a tax increase on the wealthy, a centerpiece of his campaign, after years of GOP intransigence on the issue. But Obama had to give ground too, especially on raising the income threshold for tax increases well above the $250,000 he has long supported, prompting some disaffection among his liberal allies.
The crucial sticking point was resolved with a classic congressional dodge. Unable to reach agreement on $110 billion in automatic spending cuts in domestic and defense programs, the Senate simply voted to delay those slashing cutbacks for two months, meaning the capital will be consumed by the same battle at the end of February—and maybe for years, in what is increasingly looking like the new normal.
A larger agreement on spending and taxes might have been reached weeks earlier, but the two sides were just too far apart, too entrenched, too wedded to waging partisan warfare rather than finding common ground.
This, in short, is the best they could do.
The Senate voted to raise taxes on the richest Americans, but Congress and the President avoided the tough calls on entitlements and defense. Given the players’ intransigence, particularly on the right, what else did you expect? By Daniel Gross.
This is not the cliff we’ve been waiting for. When we first began charting the Fiscal Cliff Hostage Situation on the day after the presidential election, many observers scoffed. Surely, after a clarifying election, Democrats and Republicans would come together quickly to hammer out a deal to avoid the sunset of the Bush-era tax cuts and the jerry-rigged spending guillotine known as the sequester. But those of us who have been sentient for the last several years, who lived through the horror of the TARP votes, whose August 2011 vacations were ruined by the debt-ceiling debacle, knew otherwise. After all, true believers tend not to compromise on matters of theology. And the first commandment of the modern GOP reads: “Thou Shalt Not Vote to Raise Taxes.”
(L) Chip Somodevilla/Getty (R) J. Scott Applewhite/AP
Against all odds, the Senate voted on a compromise—if only on the issue of taxes. As the remaining hours of 2012 ticked away, Senate Majority Leader Mitch McConnell and Vice President Joe Biden ironed out a deal. “I can report that we’ve reached an agreement on all the tax issues,” McConnell said in the early evening, as the deal came to predawn vote on Tuesday. Income tax rates would be preserved for families making less than $450,000, rather than the $250,000 that the president wanted. (This upward redefinition of rich from $250,000 to $450,000 will henceforth be known as “The Miracle of Fairfield County.”) Extra unemployment benefits would be extended for another year. As for spending, entitlements, the sequester, and the debt ceiling? Like a long-feuding, long-married coupled, the two parties agreed to go to sleep and argue about it in the morning.
The reactions were entirely predictable. The stock market, which fears short-term austerity far more than it fears large deficits, or partisan warfare, rallied on the news of a near-agreement.
Liberal Democrats, concerned that President Obama once again had sold them out for a half-measure compromise with Republicans, frowned. “No deal is better than a bad deal, and this looks like a very bad deal, the way this is shaking up,” said Iowa Sen. Tom Harkin. President Obama held a strangely off-key press event, at which he gloated that the as-yet-unsigned deal would force Republicans to vote for higher taxes and threatened to shove things into unnamed orifices of his opponents. As it dawned on Republicans that they might actually be casting affirmative votes on a measure that the president approved, they became cranky. Oh, and after the stock market closed, the House GOP threatened to derail the whole thing, announcing it hadn’t yet scheduled a vote on a potential deal.
So long as the contours of the deal hold, it almost doesn’t matter whether we actually go over the cliff. Congress can simply reconvene after the New Year and pass the relevant legislation.
Virtually all parties in Washington are able to spin a tale of victory to their base supporters from this deal. Democrats will be able to claim that they finally got Republicans to vote for higher taxes and sign off on unemployment benefits. Republicans will be able to claim that they got Democrats to make virtually all the Bush-era tax cuts permanent without giving up leverage on the debt ceiling.
But there is one set of Washington players for whom the fiscal-cliff drama was something of a disaster: budget deficit hawks. The fiscal-cliff drama will likely end without any grand bargain on revenues and entitlements. Yes, adjusting some of the Bush tax cuts will bring in some more cash. But on Social Security, Medicare, tax loopholes? Nothing. What’s more, the last several weeks have demonstrated the political impotence of some very powerful and moneyed players. Well-funded groups like Fix the Debt and the Committee for a Responsible Budget enlisted CEOs and other worthies behind the cause of a grand bargain. Starbuck’s urged caffeine fiends to “come together.” Blackstone Group co-founder Pete Peterson has spent hundreds of millions of dollars on conferences, campaigns, advertisements, and advocacy in favor of a grand bargain. And yet week after week, month after month, year after year, the system ignores their pleas.
He played a key role in negotiating the fiscal-cliff deal—and he did the same thing with Afghanistan, gay marriage, and more. Michelle Cottle on how Joe Biden should get some respect.
“When Joe Biden gets going on a deal, he’ll talk that deal until it’s shimmering before your eyes in God’s holy light … like the Taj Mahal … Where do I sign?” —Richard Ben Cramer, What It Takes.
Vice President Joe Biden, speaks during a meeting at the Eisenhower Executive Office Building in the White House complex Dec. 20, 2012, in Washington. (Carolyn Kaster/AP)
Sure, all of us enjoy poking fun at our loquacious, irrepressible, unpredictable vice president. Unlike most high-level pols, and certainly unlike anyone else in this administration, Joe likes to let it all hang out. In his year-end column for Investor’s Business Daily, Andrew Malcolm was reflecting the sentiments of many when he declared Biden “2012 Joke of the Year.”
And yet … When the political game gets tense, time and time again it’s Biden who gets called in. In some cases, the president wants to hear the unvarnished Joe on a ticklish issue such as Afghanistan (Biden argued for limited engagement) or health-care reform (Biden opposed tackling it so soon).
Where Biden really comes in handy, however, is when there is a sale to be made. Whether it’s pitching the president’s financial recovery plan to a skeptical public back in 2009 or the president himself to disillusioned voters this past year, Biden knows how to close the deal—as you might expect from the son of a used-car salesman.
If this is true with the general public, it is even more so among Biden’s former colleagues in the Senate, with whom he spent 36 years cutting deals and chewing the fat. Biden loves these guys (and gals)—on both sides of the aisle. He knows what makes them tick and how to speak their language (if often at greater length than necessary). And don’t let the partisan sauciness fool you. Biden may be pugnacious, but one-on-one he can be quite the charmer.
So when the Senate’s fiscal-cliff haggling finally got serious (and, as Obama noted in his remarks this afternoon, with this Congress, nothing serious gets done until the last minute) who else was Republican leader Mitch McConnell gonna call? At this point, McConnell and Majority Leader Harry Reid are so sick of each other they can barely stand to breathe the same air. To get this deal done, McConnell needed a buffer—someone he knows and trusts and who understands the pressures he’s under. He needed Joe.
Thus the VPOTUS was called back from Delaware on Sunday, and has spent the past couple of days alternately huddled up with the president at the White House and on the phone with McConnell. It is perhaps not most people’s idea of a festive end to the holiday season, but it is precisely the sort of in-the-trenches push-pull that really melts Biden’s butter.
As Obama says agreement 'within sight.'
Happy New Year, everyone—Washington is closer to a fiscal-cliff deal. Just before 3 p.m., following a promising speech by President Obama, Senate Minority Leader Mitch McConnell announced that Congress is "very, very close" to reaching a deal. "I can report that we've reached an agreement on all the tax issues," he said. Obama said he is hopeful that Congress would approve an agreement that will increase taxes on the wealthiest
2 percent of Americans, but prevent a tax hike for the rest of the country.
What's so funny? Announcing the outlines of an emerging budget deal, the president kept his tone light—and took some jabs at his Capitol Hill foes.
This time, Barack Obama didn’t face the cameras alone.
It was an almost jaunty president who brought a group of middle-class families to the White House for a televised address in which he declared that a last-minute tax deal was “within sight…but it’s not done.”
The optics were obvious, to show actual Americans who would be hit by a tax hike averaging $2,000 if Congress didn’t salvage a compromise.
The president, perhaps concerned about looking too dour lately, told jokes and bantered with the assembled citizens, which might have struck some onlookers as too frivolous given the stakes.
“I realize the last thing you want to hear on New Year’s Eve is a speech from me,” he said.
It seems that the talks between Vice President Biden and Senate Minority Leader Mitch McConnell have agreed to raise taxes on incomes above $400,000 or $450,000, extend unemployment insurance and limit increases in the estate tax.
But as Obama noted, the tentative package does not deal with deep automatic spending cuts, and that is what is holding up the process. The Democrats want to block those cuts for a year, and the Republicans are balking.
Uncertainty over dividend taxes spurred a gusher of special dividend payouts—7.5 times more than average. Big-time insiders were the big-time beneficiaries.
‘Twas the season for giving—to others and, in some cases, yourself. Self-gifting for normal retail goods like iPads was a muted trend in the just-concluded holiday season. But self-gifting of cash was downright rampant in corporate boardrooms across America.
Paul Taggart/Bloomberg via Getty
Since President Obama’s reelection and the certainty of a knock-down fight over the Bush tax cuts, it became clear to corporate boards and the big stockholders that elect them that the low, low, low 15 percent rate on qualified stock dividends was likely to rise come 2013. The endgame for the dividend rates—and everything else for that matter—remains unclear even with a few hours left until all the Bush tax cuts, and temporary ones put in place by the Obama administration, expire at the stroke of midnight on Dec. 31. But it was (and is) quite possible that dividends could go back to being taxed as ordinary income at pre-Bush levels. That means rich folks would pay tax rates as high as 39.6 percent on dividends. Regardless, the Affordable Care Act (a.k.a. Obamacare) will impose a dividend surtax of 3.8 percent on the highest earners.
And so some of America’s biggest recipients—CEOs and board members—took evasive action. The period between the election and the end of year saw an orgy or “special dividends,” one-off payouts from companies to their shareholders. According to financial data firm Markit, the fourth quarter saw 233 special dividends. That’s 7.5 times more such dividends than is typical for the final three months of the year. (An average fourth quarter has about 31 special dividend announcements.) This year’s special dividend count was three times higher than in the end of 2010, which saw 74 special dividends paid out in advance of the Bush tax cuts’ original scheduled expiration. (They were extended another two years, so the special-dividend payers were acting in haste.) All told, the special dividend payouts totaled some $30.9 billion.
The average shareholder get a chunk of this payout. But it was the insiders who really benefited from the generosity of their corporate boards. Markit’s figures show that a large portion of the dividend payouts went to large shareholders who also have a hand in running the company making the payouts. These insiders got $8.8 billion of the $30.9 billion paid out in total. Half of the special dividends were paid out by relatively small companies, valued at under $1 billion, which are more likely to be controlled by a small clique of shareholders that are also managers. Of the 233 companies that announced special dividends, 101 were more than one-fifth-owned by insiders.
The company with the highest level of insider control that paid out a special divided this quarter was Village Super Market, which operates 29 ShopRites in New Jersey, Pennsylvania, and Maryland. The company was founded by two brothers, Nicholas and Perry Sumas, in 1937, and today, six of its 12 directors are Sumases. According to Markit, Village Super Market had the largest share of insider ownership of any company that paid out a special dividend in the fourth quarter—some 93.07 percent.
Insiders at big companies wrote themselves huge checks, too. One of the biggest dividend payouts was made by Las Vegas Sands, the gambling giant, whose chief Sheldon Adelson controls more than 50 percent of the company. The company announced a $2.75-a-share dividend for a total of $2.26 billion paid to shareholders, netting Adelson and his wife $1.2 billion.
Adelson was not the only conservative billionaire who wrote himself a big check in advance of Obama allowing taxes on investors to rise—fellow Vegas anti-Obama titan Steve Wynn’s Wynn Resorts announced a $8-a-share special dividend in November, which cost $750 billion.
Details of deal start to emerge.
Deal or no deal? While the rest of Congress went to bed last night, Senate Minority Leader Mitch McConnell and Vice President Joe Biden were reportedly negotiating the impending fiscal cliff into the wee hours of the morning—and allegedly made significant progress. The deal in question would involve Senate Republicans agreeing to extend tax cuts for families who earn more than $450,000 and individuals who make more than $400,000—a significant concession for a party that has staunchly opposed hiking taxes at all. If they don’t pull through on this one, every income group will be hit with a tax hike starting Tuesday.
Now may be too late to get one passed.
If there’s no deal on the fiscal cliff, those senators who were forced to work this past week are going to get really whiny. Fiscal-cliff talks stalled Sunday over debates about income taxes, the estate tax, and other issues—even though the country will dive right off that fiscal cliff at midnight Tuesday if no deal is reached. The Senate is set to reconvene at 11 a.m. Monday, and Senate Majority Leader Harry Reid said there would “perhaps” be further developments at that time. But even if a deal is struck, getting it through both chambers of Congress before the deadline could be a challenge. All 100 members of the Senate must agree to approve an expedited vote, so even a single objection would delay it.
On issues like health care the president talked like he was ushering in a post-ideological age, but faced with GOP intransigence on the fiscal cliff, he’s no longer big on conciliation—and is treating the fight as an extension of the campaign.
'President Obama took on the Republican Party in his 'Meet the Press' appearance on Sunday.'
Say what you want about Barack Obama: he learns from his mistakes. In the early debates of the 2007–08 primary campaign, his answers were often long and meandering. By the end he was outclassing Hillary Clinton night after night. In his first debate with Mitt Romney, he seemed focused, above all, on being polite. In the second and third he focused on winning every exchange.
You can see the same improvement in Obama’s televised tussles with a different sort of political foe: David Gregory. On Sept. 20, 2009, in the midst of the battle for health-care reform, Obama sat down with the Meet the Press anchor and talked like a man who thought he was ushering in a post-ideological age. Instead of highlighting the differences between his health-care vision and the one championed by Washington Republicans, Obama blurred them. Instead of insisting that the 2008 campaign represented a public endorsement of his health-care agenda, he treated the campaign as a bout of unpleasantness best forgotten.
“I actually think that we’ve [Democrats and Republicans] agreed to about 80 percent” of the substance of a future health-care law, Obama told Gregory in his first answer of the interview. “The key is now just to narrow those differences.” But “those narrow differences can also, in some cases, be very big differences,” replied Gregory, virtually begging Obama to distinguish his vision from the GOP’s. But Obama refused, instead pointing proudly to his efforts to erase the very ideological distinctions he had spent the 2008 campaign outlining. “I’ve already made some pretty substantial changes—in terms of how I was approaching health care” as a candidate, Obama insisted. A few minutes later he cited his embrace of medical-malpractice reform as one of “a whole series of Republican ideas, ideas from my opponents during the campaign, that we have incorporated.” He ended his discussion of health care by pleading that “we’ve got to get past some of these ideological arguments to actually make something happen.”
How did all this post-ideological talk work out for the president? Not well. Washington Republicans, as it turned out, didn’t want to narrow differences on health care. To the contrary, they told Americans that the difference between their view and the president’s was the difference between freedom and tyranny. And because Obama never effectively framed the ideological debate, or even quite conceded that there was an ideological debate, he never rallied the public to his side.
How times have changed. In that first presidential interview with Gregory, Obama mentioned the word “Republican” twice in relation to health care. In his second, conducted yesterday, Obama punctuated his discussion of the looming “fiscal cliff” with seven references to the opposing party. And the emphasis was on opposing. Again and again, Obama stressed that on the budget, he and the Republicans have vastly different priorities, and that Americans chose between them last month.
“There is a basic fairness at stake in this whole thing that the American people understand and they listened to an entire year’s debate about it,” Obama told Gregory. “They made a clear decision about the—the approach they prefer ... They rejected the notion that the economy grows best from the top down.” Then in his next answer: “The way they’re [Congressional Republicans] behaving is that their only priority is making sure that tax breaks for the wealthiest Americans are protected. That seems to be their only overriding, unifying theme.” And soon after that: “What I ran on and what the American people elected me to do was put forward a balanced approach. To make sure that there’s shared sacrifice ... And it is very difficult for me to say to a senior citizen or a student or a mom with a disabled kid, ‘You’re going to have to do with less, but we’re not going to ask millionaires and billionaires to do more.’”
As a spate of last-minute fiscal-cliff deals fell through, Joe Biden and Mitch McConnell reported they had made 11th-hour progress. Howard Kurtz on whether this is false optimism.
It may be a glimmer of hope, or it may be another false alarm. But there appears to be some movement in the long-stalled fiscal-cliff talks.
(L) Drew Angerer/Getty (R) Win McNamee/Getty
With John Boehner and Harry Reid stepping to the sidelines, the negotiations have come down to two men: Joe Biden and Mitch McConnell. The vice president and Senate minority leader were batting around proposals by phone until midnight Sunday and appear to have closed the gap toward a last-minute agreement—albeit one that does nothing to deal with the deep spending cuts that would automatically take effect on Tuesday.
Word trickled out that Senate Republicans would agree to extend tax cuts for individuals earning less than $450,000 and couples making less than $550,000. This is a significant concession for a party that has staunchly opposed hiking taxes on anyone at any time for any reason.
Democrats countered with a lower income threshold for tax increases, $360,000 for individuals and $450,000 for couples—that represents movement from the $250,000 level for which President Obama relentlessly campaigned.
It doesn’t take rocket science to conclude that a compromise around $500,000 is in the offing. And the Democrats would get an extension of unemployment insurance as well. But there are still sticking points, including scheduled increases in the estate tax.
Even if Biden and McConnell hammer out a deal, time is running out. The Senate would have to pass the compromise quickly, and any senator can hold up the bill for extended debate. Then Boehner would have to bring the measure to the House floor before midnight, with ample Democratic votes needed to make up for what will certainly be a major wave of Republican defections.
The eleventh-hour flurry followed a largely pessimistic day on Sunday. It was clear from the somber tone of Reid and McConnell during an afternoon session in the Senate that Washington was still stumbling toward the fiscal cliff.
Surprised that our lame-duck representatives can’t reach a fiscal-cliff deal? You shouldn’t be. John Avlon on how our government turned to self-sabotage.
Welcome back to Washington, House of Representatives. Hope you all had a great vacation. While you were out, your inaction caused markets to tumble, and now America is just hours away from collectively being pushed off the fiscal cliff.
On “Meet the Press,” David Brooks said, “What’s happening in Washington right now is pathetic.”
Your colleagues in the Senate—the supposedly responsible body—have been working the last three days, trying to put together some kind of deal your fractious asses can pass by New Year’s Eve. The bad news is that as of Sunday morning, they still didn’t have a plan to avoid the fiscal cliff. Agreement that 98 percent of Americans shouldn’t have their taxes raised isn’t enough. And deficit and debt reduction? Forget about it—this is all now a desperate exercise in political pain avoidance.
The fiscal cliff is, of course, the world’s most predictable crisis. Congress set this time bomb themselves—and now they can’t agree on how to defuse it, despite more than a year of debate and a presidential election largely centered on the subject.
In a surreal twist, Democrats are readying bills for the first days of the new congress to pass the largest middle-class tax cut in American history if they can’t get enough Republicans to agree we shouldn’t go over the cliff.
The implications are not adequately captured by the catchy visual metaphor. Not only will your taxes be raised, but America’s economic recovery could be reversed, with congressional incompetence pushing America back into recession.
Congressional approval now stands at 18 percent. The real question is why is it so high?
With no clear breakthrough.
Negotiations on how to avoid the now-infamous fiscal cliff continued late into the night Saturday, with aids passing proposals back and forth between Republican and Democratic offices. The negotiations come one day after a “productive” but largely fruitless meeting between President Obama and congressional leadership left him “modestly optimistic.” Senate Majority Leader Harry Reid and Minority Leader Mitch McConnell are now responsible for crafting a bipartisan agreement. The House and Senate will convene in “rare Sunday sessions” tomorrow—an indication of just how grave the situation has become.
One day left, and Washington’s key players still can’t come to terms. What’s the holdup? Abby Haglage peeks at the fiscal-cliff wish lists of Obama, Pelosi, Boehner, and more.
If you’re just now entering the "fiscal cliff" conversation—the name given to automatic tax increases and spending cuts set to take effect Jan. 1, a leftover from 2011's dismal debt-ceiling debate—count yourself lucky. For the unfortunate few entrenched in the scramble to keep us from tumbling over, it’s been a taxing (no pun intended) ride. As midnight Monday approaches, here’s a look at the key players, what they want, and why their dissenting desires have brought us to the brink.
1. President Obama
Wish list: Higher taxes on the wealthy, stimulus spending, limited cuts to entitlements
Worries of a “fiscal cliff” got a whole lot more real after the Nov. 6 election, which promised the return of divided government. Acutely aware of this, the newly re-elected president began publicly advocating the need for higher taxes on the wealthy as a cornerstone of any deal, offering his first official proposal to House Speaker John Boehner on Nov. 29th. His package called for $1.6 trillion in new tax revenue over 10 years by continuing Bush-era rates for all but the wealthiest Americans; a $50 billion stimulus program; and new executive power to raise the federal debt limit without congressional approval. It was swiftly denied. Epitomizing the budget talks, his next offer was received with equal contempt. That time, the proposal was a compromise for the Democratic president—an agreement to raise the income threshold on higher rates to $400,000 (up from $250,000).
2. House Speaker John Boehner
Wish list: Limited tax increases; keeping his job
As House Speaker, the fiscal-cliff crisis is in many ways John Boehner’s cross to bear. And bear it he has. Pleasing a fractious Republican caucus, the majority of whom signed Grover Norquist’s “no new taxes” pledge, is no easy feat, especially if Boehner wants to keep his leadership position in the new Congress. After staunchly rejecting Obama’s initial offer in late November, Boehner presented one of his own on Dec. 3rd. That package called for $800 billion in new tax revenue over 10 years, to be generated through unspecified changes to the tax code (about half of what Obama proposed), and $600 billion in cuts to health-care programs, including Medicare. The White House quickly rejected the offer, claiming that it did not “meet the test of balance." After a few days of talking and finger-pointing in mid-December, Boehner came back with what many considered a triumphant compromise:“Plan B.” That proposal presented tax-rate increases only on those making over $1 million per year, protecting the other current tax rates. But in a turn of events that ultimately exposed his own vulnerability as speaker, Boehner was unable to garner enough votes from his tax-weary party to pass the compromise. Embarrassingly, he had to yank the bill from the House floor at the last minute.
3. Senate Majority Leader Harry Reid
Wish list: Extending Bush-era tax cuts for households making less than $250,000
After Obama and Boehner’s efforts ended in stalemate, an exasperated president called on the two leaders of the Senate to create a bipartisan package that, with any luck, will help the nation successfully avert the fiscal cliff. At the least, Obama said, he deserved an up-or-down vote on something. That something, if Reid, the Senate’s top Democrat, gets his wish, will be simple, clean, and look very much like what Obama himself would have drawn. Reid’s bill would most definitely extend the Bush-era tax cuts for households making less than $250,000 a year, and would likely include spending cuts to offset the change. Last week, an openly pessimistic Reid proclaimed this the “only viable escape route” to avoid tumbling over the cliff. But with many of his fellow Democrats looking to be reelected in 2014 (and many in red states), Reid has another agenda as well: keeping everyone happy.
4. Senate Minority Leader Mitch McConnell
Wish list: Read his lips: no new taxes
In the eleventh hour, Mitch McConnell—the top Senate Republican—has a crucial role in the crisis. Luckily, McConnell is no stranger to desperate times—he was instrumental in helping Vice President Joe Biden extend the Bush tax cuts in 2010. But McConnell knows what he wants, and it's in stark contrast to his counterpart, Sen. Reid. A key member of the conservative establishment, it is extremely unlikely that he will be willing to raise tax dollars on...well, anyone. A Kentucky native closely aligned with the Tea Party, he is all too aware of the scrutiny he will face should he throw the “no new taxes” pledge to the wind. But if he does get brave up and agree to raise taxes on the wealthy—essentially saving the GOP from themselves—it may mean playing the martyr, sacrificing his own ticket in 2014.
5. House Minority Leader Nancy Pelosi
Wants: Tax hikes on the wealthy (and basically, whatever Obama wants)
After the House approved the Senate's fiscal cliff deal late Tuesday night, President Obama sent a message to the next Congress, arguing for a balanced approach to deficit reduction. And he was clear about his position on the coming debt ceiling debate. 'We can't not pay bills,' he said.
But Howard Kurtz says it could prove a pyrrhic victory that could threaten his second-term agenda.
Abby Haglage peeks at the fiscal-cliff wish lists of Obama, Pelosi, Boehner, and more.
It was an ugly scramble—and leaves us facing yet another fiscal showdown before spring, says John Avlon.
The president’s budget battle is really a fight with 200 years of obstructionism and selfish greed. By Michael Tomasky.
Impress the relatives with tidbits from our guide on everything from the sequester to the supercommittee.
John Avlon on how our government turned to self-sabotage.
New polls shows that voters are ahead of politicians in understanding the necessity of reforming entitlement programs, writes Eleanor Clift.