With the year-end deadline racing like a freight train there seems to be no light at the end of the tunnel for bipartisan talks to solve the fiscal cliff crisis. Despite major concessions by both President Obama and House of Representatives Speaker Boehner the “fiscal cliff” talks are not going well. The president says that the Republicans are trying to push him into making concessions “just for the heck of it.” Meantime Boehner is working on a “Plan B” that the Republicans plan to put to a vote by the end of this week. This plan in essence negates all the progress made in the negotiations.
Throughout the day Boehner was confident that the House of Representatives passed the legislation on Thursday. Accordingly, he called on President Obama to “get serious” about a balanced deficit reduction plan. Boehner is enraged at Obama for opposition to the plan which will raise taxes on households that make more than $1 million a year and is contrary to long standing opposition from Republicans regarding any increase in tax rates.
If Plan B were to pass Congress, which is unlikely as the Democratic controlled Senate will not vote for it, the President has threatened to veto it.
Brendan Buck, Boehner’s spokesperson said:
“The White House’s opposition to a backup plan… is growing more bizarre and irrational by the day.””
Although investors expect a deal to be made, Wall Street is skittish with the S&P 500 stock index slipping 0.76 percent on Wednesday. Business leaders are flocking to Washington to personally lobby for a solution to this fiscal crisis while putting the country’s finances on a path that is sustainable. These leaders fear that if these talks don’t have a long-term impact on lowering deficits, the United States might someday lose the trust of investors, which could trigger a debt crisis.
Some political operatives speculate that Boehner’s vote on Thursday is a way to see if Boehner still has the capability to deliver his caucus for any eventual deal. Although Tea Party conservatives and outside conservative groups such as the Club for Growth are urging Republicans to vote against Plan B, Grover Norquist a well-known anti-tax activist blessed Plan B signaling some movement from hard-line conservatives.
If a deal remains elusive through the end of the year there’ll be an automatic increase in tax hikes and spending cuts amounting to around $600 billion. Obama has indicated a willingness to change the way the consumer price index is calculated for social security recipients and has changed his position on taxes the very wealthy from households earning $250,000 to households earning $400,000. Based on the changes in positions from both sides Senate Minority Leader Mitch McConnell said:
“There’s still enough time for us to finish all of our work before the weekend, is where all willing to stay late and work hard.”
Stay tuned for more Tales from the Fiscal Cliff.