A Guide to the End of the Fiscal Cliff

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The debt-limit debacle of 2011 created the fiscal cliff of 2012, but the homestretch of this new fight is going to be different than the one that created it. President Obama has figured out that his personal charm does not work as well on House Republicans as it does on voters. In 2011, President Obama had one-on-one talks with House Speaker John Boehner over a "grand bargain" that collapsed. This time, as The Wall Street Journal explains, Obama is making stump speeches and launching Twitter wars to increase public pressure on House Republicans to extend the Bush tax cuts only for those making less than $250,000 a year. Right now, polls are showing that a majority of Americans support raising taxes on those making more than $250,000 a year and oppose raising the eligibility age for Medicare. But the next four and a half weeks, well, they might look something like this.

Phase One: Pure choreography

Timeframe: Now through mid-to-late December, according to NBC News' First Read, which insists that Washington always waits till right before deadline.

What to expect: Campaign-style speeches, floating compromises on TV, showy meetings.

  • Speeches: Obama gave a speech with small-business owners behind him Wednesday, and he'll campaign in front of a toy factory in Philadelphia Friday, with part of the new stump speech including a nugget taht going over the cliff could scare off holiday shoppers. (Nice little Christmas you got there, it'd be a shame if anything happened to it.) In response, House Republicans will launch their own public events in Washington and their home districts to campaign against raising tax rates, CNN's Deirdre Walsh reports.
  • TV: There will be lots of cable-news interviews in which legislators from both sides will float certain ideas. Several Republicans have talked about violating Grover Norquist's no-new-taxes pledge, and New York Rep. Peter King suggested his wife would cause Norquist physical pain. Oklahoma Rep. Tom Cole suggested Republicans agree to extending the Bush tax cuts for those making less than $250,000 a year, as Obama wants, and then fight over everything else in the new year, Politico reported. House Speaker John Boehner rejected that idea Wednesday. On the Democratic side, Sen. Dick Dubin suggested cuts to entitlements would be part of a deal... eventually.
  • Meetings: Treasury Secretary Tim Geithner, Obama's appointed fiscal-cliff negotiator, will meet with congressional leaders Thursday. Republican leaders immediately put out press releases suggesting they think the meetings will lack substance, Politico noted. Obama met with small business owners Wednesday; the following speech was "his first in what is expected to be a series in coming weeks," The Wall Street Journal reported. In this one, Obama called on voters to pester members of Congress with tweets. Obama had an unannounced meeting with a dozen business leaders to talk about the fiscal cliff at the White House November 16, Bloomberg reports. Since it was secret, it sounds more real, although maybe leaking it is part of the choreography?

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Phase Two: Actual talks

Timeframe: The last half of December.

What to expect: We won't know exactly what's happening till it's already happening. Expect a lot of photo ops with furrowed brows showing how serious our serious leaders are. Republicans and Democrats could just pass the Bush tax cuts for the middle class, as Cole suggested, or they could agree to an idea floated by Boehner's office that would delay the cliff with both sides agreeing to a general plan, stopping the automatic cuts and tax hikes from happening, and then figure out the fine print later. As New York's Jonathan Chait explains, Obama isn't likely to agree to that. In fact, there isn't much faith negotiations will work out. When asked whether Obama would do better to stay in Washington instead of stumping for his tax policy, White House press secretary Jay Carney seemed to not think too highly of high-profile meetings. "Only inside the Beltway do people think that sitting in a room for a photo spray will solve problems... I don’t think there is a lot of faith that a bunch of people sitting around a table in a room are going to solve problems on behalf of the American people... if those sitting around the table aren’t also communicating and engaging with the American people."

If the cliff is jumped...

Phase Three: Desperation

Timeframe: January 1, 2013 - ?

What to expect: If all the tax increases and spending cuts go into effect, it could eventually cause a recession. To stop that, the Treasury Department can freeze paycheck withholding levels even if Congress doesn't act to extend the Bush tax cuts. Freezing them could save taxpayers $10 billion per pay period, Bloomberg's Richard Rubin reports.

If the cliff is avoided...


This article is from the archive of our partner The Wire.