Everyone is so sick of earring about the ‘cliff, our January 1 deadline whereby the nation’s financial system is expected to “right-size” itself as a result of failed attempts by the legislature in Washington D.C. If you follow this blog at all, you know that we have beat this topic like a dead horse to simply educate everyone on how we foolishly arrived at this point.
After a year of conversations about the looming deadline, the hope for reaching a deal to avoid the drastic slashing of entitlement programs like Medicare and Medicaid, sharp spending cuts to the Defense Department totaling hundreds of billions of dollars and an immediate across the board tax increase to every single American.
As reported by Politico, a Senior GOP Aide close to the discussions said, “No negotiation can change the fundamentals” meaning everyone has already drawn their lines in the sand and there’s not much left to discuss. What precisely are those fundamentals?
1. Senate Majority Leader, Harry Reid (D-NV) will need to get the assurances from the GOP Minority Leader in the Senate, Mitch McConnell (R-KY) that he won’t attempt to block or delay the bill, a filibuster, and wont encourage his Senate members to block it with useless motions and amendments.
Senator Reid will also need the Speaker of the House, John Boehner (R-OH) to promise to permit any bill that passes in the Senate to actually receive a vote in the republican controlled Congress, even if only democrats vote for it (the Speaker can prevent or permit a bill from ever being discussed or voted on).
Mr. Reid doesn’t want to try to hammer out a deal or even get his Senate Democrats to vote on anything if the republicans in the Senate or the House are just going to block it. So before sticking his neck out there, revealing his hand, possibly hurting any negotiating posture he may take in the future, he wants to know he’ll have a clear path to actually get a vote on anything the democrats come out for. Speaker Boehner knows all too well why that concerns Senator Reid considering he himself recently came out for increasing tax revenues and then further suggested increasing tax rates for those making over a million dollars annually, only to have his on colleagues refuse to support such a measure. Republicans are truly boxed in by the President and the flack Boehner has taken for his about-face on tax rates may cause trouble for him later.
2. Senate Minority Leader Mitch McConnell needs The White House to cut back on the tax increases its demanding from republicans. McConnell doesn’t see anything they can claim as a victory to their constituents once the debt fight is over. All the advantage is leaning Obama and McConnell simply can’t sign off on anything that shows a win in the Obama column solely. But if The White House increases the income cut off from the current $250,000 to say, $750-800,000, that will be a clear victory for the GOP. Although the President has signaled he would be in favor of $400,000 income earners and above, what McConnell is wanting is not likely.
As an alternative, McConnell will accept deeper cuts to some spending in major entitlement programs like Medicaid or the President’s Affordable Care Act, ObamaCare, to offset tax rates increases to the wealthy…neither likely to happen.
Finally, as Senator Reid is requesting a clear path for a democratic bill to pass the Senate without obstruction from McConnell, the Minority Leader is not likely to oblige Mr. Reid without prior coordination with Boehner. If McConnell allows a bill by democrats to get out of the Senate without filibustering it, it then goes to the House of Representatives where the pressure would then be on Speaker Boehner and the GOP to support it and McConnell isn’t likely to add more pressure to to his republican colleagues in the House so he’ll have to block or delay the bill; jumping on the grenade for the House republicans.
Either way, republicans will be blamed for the delay, the obstruction and ultimately the fiscal free-fall the economy and the recession that is almost certain if no action is taken. Reports are already surfacing that imply the President would use his Inaugural address and his State of the Union address to blame republicans for any damage caused to the economy if no deal is reached in time.
With so much to lose, both sides of the aisle have begun to instead search for any political upside if any, to see what’s the worse that could happen once over the cliff. Speaker Boehner may be able to negotiate without the attacks from his own flank to do something more significant on taxes and rates.
3. Democrats have a bigger majority in the next Congress so it may be advantageous to wait and go over the cliff, knowing their majority will be able to change the conversation after Jan 1. The 10 member Senate majority and the increased presence in the House Minority, makes the Dems a force to reckon with.
Some or all of these “fundamentals” are necessary to move legislation in the next week to thwart an economic free-fall. Lets not forget, we are here because this government cannot find a way to negotiate. They have such distrust and disdain for each other, this cliff is beginning to look like the best alternative to losing to each other. This government is on a crash course to stupid-ville. Just know, while all this is going on, some small group of strategists are huddled in some capital hill basement thinking up possible attacks on the other side to blame away their involvement in this calamity; a sad case of throw the rock-hide your hand.
These fundamentals are only necessary as each side looks to bulletproof themselves, even if the American public stands in the line of fire. This is not friendly-fire, it’s a slaughter to the finances and stability of hard working Americans. That’s my story and um sticking to it.