Cliff Notes: The Price of Politics

After months of warning Americans of the devastating economic consequences of going off the cliff, all we’ve seen from Congress is more grandstanding, more press conferences and the same sticking points we’ve known about for more than a year. Now, according to recent reports, some in Washington believe the politics of going off the fiscal cliff could be better for their own self-interests than actually finding a solution. So if going over the cliff is better than a raw deal, Americans should be asking who exactly it’s better for—them or the politicians?

WASHINGTON PUTTING POLITICS AHEAD OF THE ECONOMY

Politicans Likely To Benefit From Going Over Fiscal Cliff:

Going Off the Cliff Might Be A Good Thing – But Only For Lawmakers. “Washington’s Democratic and Republican power brokers have sent the message to the nation that going over the fiscal cliff is a worst-case scenario. But they’re not acting that way, not at all. Instead, many of them have calculated that it’s better to go over the cliff — at least temporarily — than swallow a raw deal.” (Jonathan Allen, “Why They Want to Go Over the Cliff,” Politico, 12/28/12)

Both Sides Playing The Blame Game, Acting In Own Political Self-Interests: “Both sides are playing blame-game politics, with no budget deal in sight just days before the year-end deadline. … The capital’s politicians seem wedded to acting in their own self-interest, rather than the national interest, even as we barrel toward a fiscal train wreck.” (Howard Kurtz, “Parties Resort To Finger-Pointing As U.S. Heads Over Fiscal Cliff,” The Daily Beast, 12/28/12)

Republicans Can Blame Obama For Big Tax Hike And Later Vote For “Tax Cuts.” “For many Republicans, a cliff dive means blaming President Barack Obama for a big tax hike in the short term and then voting to cut taxes for most Americans next month. That’s an easier sell back home in Republican-heavy districts than a pre-cliff deal that raises taxes on folks making over $250,000 or $400,000, extends unemployment benefits and does little if anything to curb entitlement spending. If they back a bad deal now, they run the risk of facing primary challenges in two years.” (Jonathan Allen, “Why They Want to Go Over the Cliff,” Politico, 12/28/12)

Democrats See Greater Room For Negotiating With Republicans Post-Cliff Dive. “For Democrats, the cliff is better than setting a rich man’s cutoff in the million-dollar range — or worse yet, extending the Bush tax cuts for all earners — and slashing Medicare and Social Security to appease Republicans. They, too, see an advantage in negotiating with Republicans who will feel freed from their promise not to vote to raise taxes once the rates have already gone up.” (Jonathan Allen, “Why They Want to Go Over the Cliff,” Politico, 12/28/12)

Obama Approval Rating Up, Republicans Down. Why Cave To GOP? “Obama’s polling in the mid-50s on his handling of the fiscal cliff situation, according to Gallup. Republicans are mired in the 20s. Why cave to the GOP when the president is winning?” (Jonathan Allen, “Why They Want to Go Over the Cliff,” Politico, 12/28/12)

DAYS AWAY FROM FISCAL CLIFF, WASHINGTON TWIDDLES THUMBS

Congress Playing Politics As Usual, No New Ideas To Avoid Cliff:

Days Left To Avert Cliff And Congress Shows No Urgency. “[W]ith days left before the fiscal punch lands, both sides are exhibiting little sense of urgency, and new public statements Wednesday appeared to be designed more to ensure the other side is blamed rather than to foster progress toward a deal.” (Jonathan Weisman, Jennifer Steinhauer, “Senators to Return With 5 Days Left and No Clear Fiscal Path,” New York Times, 12/26/12)

Lawmakers Revert To Old Bargaining Positions. “So, with just five days to go before some $600 billion in tax hikes and spending cuts take hold, congressional leaders are hunkering down in bargaining positions back to where they were before the August break.” (Gail Russell Chaddock, “’Fiscal cliff’: Finger-pointing furiously, Congress slouches toward deadline,” Christian Science Monitor, 12/27/12)

Congress Returns From Vacation Only To Resume Gridlock. “Democrats and Republicans snarled across a partisan divide and showed no sign of compromise to avoid year-end tax increases and spending cuts.” (“Congress bickers over ‘fiscal cliff’ as Obama cuts vacation short, returns to White House,” Associated Press,  12/26/12)

WHAT ABOUT ALL WASHINGTON’S PROMISES OF COMPROMISE A MONTH AGO?

Washington Is All Talk And No Action On Bargaining:

Obama Promised “Action,” No More “Politics As Usual” After Election-Night Win. “’Tonight, you voted for action, not politics as usual,’ Obama said.” (Christi Parsons and Kathleen Hennessey, “Obama pledges ‘not politics as usual’ in second term,” LA Times, 11/6/12)

Boehner Post-Election: There’s A “Mandate For Us To Find A Way To Work Together.” “If there’s a mandate in yesterday’s results, it’s a mandate for us to find a way to work together on solutions to the challenges we all face as a nation.”—House Speaker John Boehner (video: “John Boehner: There’s a Mandate to Work Together,” ABC News, 11/8/12)

Obama: Let’s Get A Fiscal Cliff Deal By Christmas. “’I believe that both parties can agree on a framework that does that in the coming weeks. In fact, my hope is to get this done before Christmas,’ Obama said.” (Mark Felsenthal, “President Hopes For Deficit Deal By Christmas,” Reuters, 11/28/12)

Reid: We Don’t Have To Fight. “Everything doesn’t have to be a fight. That is the way it’s been the last couple of years.”—Sen. Harry Reid (Josh Levs and Tom Cohen, “Re-elected Obama plunges into debate about deficit,” CNN, 11/8/12)

Obama: “[W]e Can’t Risk Partisan Bickering And Political Posturing.” “’The nation, as you know, is at a critical point,’ [President Obama] said. ‘At a time like this, we can’t risk partisan bickering and political posturing. Our leaders have to reach across the aisle to do the people’s work.’” (Josh Levs and Tom Cohen, “Re-elected Obama plunges into debate about deficit,” CNN, 11/8/12)

AMERICANS BRACING FOR THE IMPACT OF THE FISCAL CLIFF

Cash-Strapped Parents “Terrified,” Small-Business Owners Worried. “Cash-strapped parents are terrified they won’t be able to buy essential items for their children if tax credits are slashed by half. Wall Street brokers are afraid that higher taxes will lead investors to pump less money into the economy. And small-business owners worry they’ll have to cut staff and implement hiring freezes.” (“NYers brace for full impact of fiscal cliff,” New York Post, 12/28/12)

American Paychecks Set To Shrink. “After strong gains in income in November, American households will see their paychecks shrink a bit when a two-year payroll tax ‘holiday’ expires Dec. 31.” (John W. Schoen, “Consumers, businesses brace for ‘fiscal cliff’ impact,” NBC News, 12/27/12)

Going Over The Cliff Means A $3,500 Increase In Annual Taxes For The Average American. “The Tax Policy Center estimates that the combined effect of the tax hikes will raise taxes by an incredible $500bn over the next decade, which means a $3,500 increase in the yearly tax bill for the average American.” (Heidi Moore, “Fiscal cliff: what happens if Congress can’t strike a deal?” The Guardian, 12/28/12)