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Fiscal Cliff Talks Likely To Go Down To The Wire

7:22 AM, Nov 30, 2012   |    comments
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Sit back and relax, this is going to take a while.

It's always been questionable that the White House and the administration would reach a quick agreement to head off the end-of-the-year "fiscal cliff" -- and as of Friday it looks even less likely.

The White House on Thursday made an offer to Congressional Republicans -- basically the same plan President Obama proposed during the election, one that emphasizes higher taxes on the wealthy as a way to reduce the nation's $16 trillion-plus debt.

GOP members attacked the White House plan -- just as they did during the election -- saying it promotes tax rate hikes but fails to detail meaningful spending cuts.

The fiscal cliff is a series of automatic tax increases and budget cuts that kick in next year if the parties are unable to reach agreement -- and there are many reasons to think the talks will go right down to the deadline, and perhaps over it.

Government officials may well spend New Year's Eve crunching budget numbers rather than clinking champagne glasses.

Among the reasons:

-- There's no real incentive for the parties to reach an agreement now. Markets may want an early settlement, but, as mentioned, the fiscal doesn't start until Jan. 1 -- more than four weeks way, a near-eternity in politics. Even after Jan. 1, elements of the fiscal cliff phase in gradually, and a new Congress could always pass legislation retroactive to the start of the year.

-- Negotiators will try to add things to the basic debt reduction agreement. Democrats and Republicans have signaled they want additional issues addressed as part of a fiscal cliff agreement; they will take the time to push these issues, and hope the pressure of the deadline will persuade the other party to agree.

The White House and some Democrats want Congress to go ahead and raise the debt ceiling now; House Speaker John Boehner, R-Ohio, and some Republicans have said they wants health care and entitlement reform as part of a deal now.

Expect pushes for last-minute concessions.

-- The biggest reason for a deadline agreement: This is just the way things are done in Washington.

The White House and the Republican House went down to the last minute on the looming government shutdown and the subsequent debt ceiling dispute of 2011.

Why wouldn't they go down to the last minute on the fiscal cliff talks of 2012?

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