House and Senate leaders from both parties will make their way to the White House this afternoon at President Barack Obama’s request for a last-ditch effort to reach an agreement to avoid the impending fiscal cliff.
The parties will enter the meeting seeming as far apart as ever on an agreement to avert the combination of automatic tax hikes and spending cuts set to take effect on Jan. 1. Republicans, led by House Speaker John Boehner, R-Ohio, say they have acted – by passing an extension of all of the expiring Bush tax cuts, an unpalatable proposition to Democrats – and now it’s the Senate’s turn.
The speaker’s office said Boehner “will continue to stress that the House has already passed legislation to avert the entire fiscal cliff and now the Senate must act” at tomorrow’s meeting.
And the Senate, led by Majority Leader Harry Reid, D-Nev., is demanding that the GOP-held House assents to a bill that would allow taxes to rise on income over $250,000 per year.
Under pressure to show up even without a deal in hand, Congress will work this holiday weekend as the top Democrat and Republican leaders sit down with President Obama to discuss the fiscal cliff. NBC's Kelly O'Donnell reports.
This posturing by both parties amounts to little more than a stalemate in lawmakers’ effort to avert the fiscal cliff, just days before the deadline to forge a deal. With that in mind, here are the variables to watch, which could signal either breakthrough or failure on the fiscal cliff.
TONE: Hopes for a fiscal cliff compromise spiked on Nov. 16 when the same congressional leaders who are gathering Friday appeared jointly following their first meeting at the White House to hail the “constructive” conversation, all the while avoiding the usual partisan barbs.
Negotiations have deteriorated in the weeks since then, to say the least.
But with time running out before the end-of-year deadline, how or whether lawmakers speak following their meeting with Obama could speak volumes about the prospects for a deal.
If Boehner, Reid, House Minority Leader Nancy Pelosi, D-Calif., and Senate Minority Leader Mitch McConnell, R-Ky., appear jointly – as they did in mid-November – it might portend good things about a potential resolution to the fiscal cliff.
But if they take to the microphones outside the West Wing separately (or issue statements), offering more vitriolic rhetoric and finger pointing, it would suggest bleak prospects for ongoing negotiations.
PROCESS: Much of the recent stalemate in Congress, as outlined above, involves whether it’s up to the House or the Senate to act first to resolve the fiscal cliff.
Neither party wants to be the one to make the first major concession, meaning that the House is looking to the Senate (and vice-versa) to be the first chamber to “jump,” so to speak.
Boehner has clearly and repeatedly signaled his desire to let the legislative process take its course. He argues that the Senate should amend any of the earlier tax bills that the Republican House has passed. The Senate could conceivably gut that legislation, replace it with any alternative that the upper chamber desires, and send it back to the House to see whether it can pass.
Alternatively, Reid is simply demanding that Republicans pass an existing Democratic tax bill, which would preserve existing tax rates on income under $250,000 a year. (Republicans counter that this law has a so-called “blue slip” problem –asserting that it’s procedurally flawed because tax bills cannot originate in the Senate, according to the Constitution.)
If the leaders emerge from their meeting at the White House with a clear idea of which chamber might act first, it would be a first step toward resolving the fiscal cliff by the New Year’s Eve deadline.
Senator John Thune, R-S.D., and Senator Chuck Schumer, D-N.Y., discuss the possibility of the country slipping over the fiscal cliff and weigh in on what needs to be the guiding principles in the last-ditch discussions.
NUMBERS: Senate Democrats want the House to pass a bill that would preserve existing tax rates on incomes below $250,000.
Obama offered a deal to Boehner that would preserve income beneath a slightly higher threshold: $400,000 per year.
Boehner tried – and failed – to pass a bill (his “Plan B”) that would have kept tax rates the same for all income under $1 million.
If the leaders emerge from the White House today with some sort of number on which they have agreed, it could provide the framework for a final agreement.
Just as important have been the topline numbers – that is, the target total savings in an agreement as collected from new taxes, or alternatively, spending cuts.
The president initially sought $1.6 trillion in new tax revenue before lowering that target to $1.4 trillion. Republicans offered $800 billion in revenue, which they said could be collected through tax reform that closes a number of deductions and loopholes.
At the same time, Obama’s last offer to Boehner included $1.2 trillion in spending cuts, including $400 billion in savings from entitlement programs.
An agreement of that scale seems unlikely with just a few days to go until the deadline, but an agreement on these topline numbers – either on a small deal, or a big deal – would suggest a degree of progress toward a solution.
CAN-KICKING: One option available to lawmakers would be to do something they’ve done all along: punt the problem to a later deadline.
In many respects, the fiscal cliff represents the ultimate example of lawmakers’ habit of kicking the can down the road. The automatic spending cuts that compose part of the cliff grew out of their inability to reach an agreement with Obama on taxes and spending during the debt ceiling fight in 2011. And the impending tax hikes are the byproduct of a two-year extension of the 2001 Bush tax cuts past their original expiration date in 2010.
But what Congress can do, it can also undo. And that means they could conceivably agree to delay the onset of the fiscal cliff for weeks, months or even a year to give themselves breathing room to negotiate a deal.
Furthermore, a decision to delay the fiscal cliff could mean that the contours of a fiscal cliff compromise have taken shape, and that lawmakers just need more time to hammer out the details. Alternatively, another can-kicking incident could rattle markets thanks to another instance of governing by lurching from crisis to crisis. Furthermore, it would do little to resolve the uncertainty on taxes that is hanging over many businesses heading into the new year.
THE FLANKS: Lastly, it’s important to keep an eye on the flanks in both parties – liberal Democrats and conservative Republicans – in terms of how they react to today’s meeting, and any possible deal that might emerge.
How many liberals or conservatives finish the day rattling their sabers, versus sitting on their hands?
The more anger there is on either flank toward any potential proposal, the more difficult it becomes for leaders in the House and Senate to find the necessary votes to approve an agreement – especially in such a politically polarized environment.
The importance of the flanks played vividly last week in the House, when conservatives refused to go along with Boehner’s “Plan B” (the proposal that would have allowed taxes to go up on millionaires) because, as the speaker put it, “they were dealing with the perception that somebody might accuse them of raising taxes.”
Jonathan Ernst / Reuters
President Barack Obama returns from Christmas visit in Hawaii to the White House, Dec. 27, 2012.
Any final agreement will almost certainly have to involve both Democratic and Republican votes. But if either party’s base is incensed by Friday’s meeting at the White House, it would make mustering the political willpower to pass an agreement that much more difficult.