Fiscal Cliff Countdown: What the Principals Want

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 ObamaWish list: Higher taxes on the wealthy, stimulus spending, limited cuts to entitlementsWorries 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)

On top of being one of Obama’s closest allies, House Democratic leader Nancy Pelosi is a galvanizing force in the Democratic party. The feisty 72-year-old Californian has repeatedly voiced her opinion on the fiscal cliff crisis: “No tax hikes, no deal.” Pelosi says cap deductions and closed loopholes will not be enough, and will bring in “far too little money” to begin brining the deficit down. Looking at her past, it’s doubtful the minority leader will give up without a fight. Thankfully, she appears to be a bit more optimistic than her male counterparts. When first asked what she thought about the apparent “stalemate” between Obama and Boehner, Pelosi responded, "Maybe that's a figure of speech." Overall, Pelosi wants to help Obama out. In this case, it means raising taxes on the wealthy. Period.

6. House RepublicansWish list : No new taxes, Boehner be damned

The whole thing is arguably the House Republicans’ game to lose. The GOP rank and file in the House have made it abundantly clear that they would be loathe to see any tax-rate increases as a part of the fiscal cliff legislation. For the majority, this is the result of a “no new taxes” pledge they signed through Grover Norquist. But no new taxes—in the absence of spending cuts—could mean sheer and utter failure. Boehner’s disastrous attempt to curry enough Republican support on Plan B—a proposal which included an increase in tax rates only on incomes over $1 million—delivered a clear message from his Republican peers. “We’re not budging.” But budge they must, and budge on spending cuts the Democrats must too, or else tumbling down the hill we will go. It's game time in Washington.