All Eyes on Senate as Fiscal Cliff Nears

Your News Companion by Ben Mathis-Lilley
Dec. 29 2012 4:19 PM

All Eyes on Senate as Fiscal Cliff Nears

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Senate Minority Leader Mitch McConnell is having a busy weekend

Photo by Drew Angerer/Getty Images

Senate leaders and their staffs were working on Saturday to try to reach some sort of mini compromise deal that would, at the very least, prevent middle-class tax increases and maybe even some spending cuts from taking effect when the clock strikes midnight on Dec. 31, 2012. President Obama took to his weekly radio and Internet address to repeat pretty much what he said Friday night: Let’s get a stopgap deal done. “If an agreement isn’t reached in time, then I’ll urge the Senate to hold an up-or-down vote on a basic package that protects the middle class from an income tax hike, extends vital unemployment insurance for Americans looking for a job and lays the groundwork for future progress on more economic growth and deficit reduction,” Obama said. (Watch the address after the jump.)

As of early afternoon there were still no signs of a breakthrough, reports Politico. Although Republican leaders and the White House have reportedly been discussing a deal where the income threshold to extend tax cuts would be $400,000 “there are major differences over estate taxes as well as whether to include spending cuts in the plan.” A Senate Republican aide tells Reuters it might not be known until Sunday whether the talks are getting somewhere. Even if Senators agree though there is still lots of mystery as to what Speaker of the House John Boehner will do if a measure reaches the House of Representatives, reports the Washington Post.

“Let us know what you come up with, and we’ll consider it,” Boehner reportedly said at the White House, “accept it or amend it.” Still, if the Senate vote does take place New Year’s Eve as now seems likely, there will be no time for any House amendments. In fact, the House would have only a few hours to decide whether to approve the legislation.

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Even though the two sides still seem to be far apart, fear of how the stock market could react if the country were to go over the cliff could help push through a deal, points out Politico. Even though tax increases and spending cuts could be reversed early in 2013, there’s concern that whatever damage is done to the market won’t be as easy to undo.

One thing that does seem clear at this point though is that any last-minute deal would do very little to actually reduce the deficit, and could even end up expanding it, meaning that lawmakers will face some tough choices next year, points out the Wall Street Journal. At first, Washington leaders had said they wanted any package deal to cut the deficit between $3 trillion and $4 trillion over the next decade.

For now, the widespread concern that lawmakers may end up getting blamed for a sharp economic slowdown if they’re unable to prevent the country from going over the cliff seems to have added new urgency to Capitol Hill negotiations, points out the New York Times. “It’s a little like playing Russian roulette with the economy,” said Sen. Mark Warner, Democrat of Virginia. “The consequences could be enormous.”

Daniel Politi has been contributing to Slate since 2004 and wrote the "Today's Papers" column from 2006 to 2009. You can follow him on Twitter @dpoliti.