Will Congress Punt on the ‘Fiscal Cliff’?

Posted November 12, 2012 at 10:46pm

A revitalized President Barack Obama is already clashing with a still-solid GOP House majority in a lame-duck session that looks to be configured for the same gridlock that has tied up Washington, D.C., for the past two years.

Foremost among the challenges facing the White House and Congress is steering away from the “fiscal cliff” of broad tax increases and deep spending cuts slated to take effect in January, which could push the fragile economy back into recession.


Without action by year’s end, the George W. Bush-era tax cuts would expire, as would a 2 percent Social Security payroll tax cut and unemployment benefits for millions of jobless. At the same time, $109 billion in across-the-board spending cuts would begin to take effect under the sequestration agreed to under last summer’s debt ceiling law.

Lawmakers on both sides of the aisle want to continue at least some of the tax cuts and strongly oppose the automatic spending cuts, particularly those directed at the Pentagon. But there is no consensus on a solution, with Democrats demanding revenue increases and Republicans resisting.

Both sides had hoped the elections would settle the standoff, but Republicans and Democrats appeared to be entrenched in their positions as the voting gave way to a Congressional landscape that looks, on the surface, little changed. Democrats argue that because Obama campaigned on the idea of raising tax rates for the wealthiest Americans, some of the tax cuts should be allowed to expire.

On Friday, Obama made that argument himself in his first public statement since election night, rejecting the idea that he didn’t have a mandate to raise taxes on the wealthy.

“This was a central question of the election,” Obama said, contending that a majority of people agreed with his position, including Democrats, independents and many Republicans. “Our job now is to get a majority in Congress to reflect the will of the American people.”

But the only sign that GOP lawmakers might bend was that some members of the leadership have suggested the most contentious issues should be put off until next year.

In his own media availability Friday, Speaker John Boehner (R-Ohio) hinted at his previous suggestion that lawmakers punt on the fiscal cliff until the 113th Congress, so the new Members elected Tuesday have the ability to weigh in.

“I propose that we avert the fiscal cliff in a manner that ensures that 2013 is the year our government finally comes to grips with the major problems that are facing us,” he said.

White House Press Secretary Jay Carney declined to go into details on exactly how Obama wanted to avoid the fiscal cliff beyond extending the middle class tax cuts, saying those details would be negotiated.

Still, many political analysts do not expect Congress to ring in the New Year without taking some action to ward off what could be a major hit to the economy.

“I’m sure political parties, both of them, understand that the American people will not be amused if the failure of the parties to get to ‘yes’ produces a new recession,” says William A. Galston, a senior fellow at the Brookings Institution and former adviser to President Bill Clinton.

For that reason, lawmakers might agree to a stopgap of some sort, allowing the 113th Congress to chart the country’s fiscal course free of immediate economic peril.

“They’re going to want to buy time,” said Ross Baker, a Congressional scholar at Rutgers University who predicts “the Olympic event in Washington known as kicking the can down the road.”

Senate Majority Leader Harry Reid (D-Nev.) shrugged that aside on Wednesday, saying lawmakers “should roll up our sleeves and get it done.”

Congress has a daunting list of other unfinished business.

Farm state lawmakers are still hoping to pass multi-year legislation to reauthorize the country’s agricultural programs. National security measures — including this year’s defense authorization bill, a cybersecurity bill and legislation to reauthorize the government’s surveillance authority — are also expected to occupy floor time.

Prominent business groups, including the U.S. Chamber of Commerce, are pushing Congress to act on legislation establishing permanent normal trade relations with Russia. The bill is backed by the Obama administration and breezed through the Senate Finance and House Ways and Means panels, but Congressional leaders have struggled to set up a procedural path to passage.

A bipartisan group of lawmakers is also expected to push for a supplemental appropriations bill for the Federal Emergency Management Agency and other agencies in response to Hurricane Sandy.

A host of other measures remains on the lame-duck agenda, including an overhaul of the Postal Service, a reauthorization of the Violence Against Women Act and a bill to increase the number of visas for highly skilled immigrants.

Sarah Binder, a Congressional scholar at George Washington University, said lame-duck sessions generally do not deviate from the rest of the year in strategy or output.

“It’s a myth that lame-duck sessions are these miraculous” periods, she said, where lawmakers are freed from normal constraints and suddenly change behavior.


Steven T. Dennis contributed to this report.