Where things stand

Updated
 
Where things stand
Where things stand
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We’ve reached the point at which the looming fiscal deadlines are so close, we can count them in hours, not days. Indeed, as I hit “publish,” the ball drops in Times Square in just 62 hours.

So, where do things stand in Washington? The picture is a little murky.

President Obama met yesterday with the top lawmakers from both chambers at the White House yesterday, and declined to do what Republicans wanted him to do. The GOP request was simple: Obama should guess what might make Republicans happy, craft a new offer with preemptive concessions designed to satisfy conservatives, and then wait for GOP leaders to tell him whether the new offer is good enough. The president, fortunately, is not a fool and did not play along.

Instead, they agreed to allow a new set of negotiations to advance. Obama/Boehner talks are out; Reid/McConnell talks are in.

At the urging of President Obama, the Democratic and Republican leaders of the Senate set to work Friday night to assemble a last-minute tax deal that could pass both chambers of Congress and avert large tax increases and budget cuts next year, or at least stop the worst of the economic punch from landing beginning Jan. 1.

After weeks of fruitless negotiations between the president and Speaker John A. Boehner, Mr. Obama turned to Senator Harry Reid, the majority leader, and Senator Mitch McConnell of Kentucky, the Republican leader – two men who have been fighting for dominance of the Senate for years – to find a solution. The speaker, once seen as the linchpin for any agreement, essentially ceded final control to the Senate and said the House would act on whatever the Senate could produce.

And so, we’re waiting. The respective Senate leaders – both of whom are adept at deal-making – will try to reach a resolution today, with the intention of holding a vote tomorrow. If they succeed in crafting a plan, and it passes, Boehner has agreed to bring it to the House floor – even if most of his caucus disapproves – probably on Monday, the last possible day to act.

This is a machine with plenty of moving parts, but looking ahead, there are two main questions to keep an eye on: (1) what might the Senate plan look like? and (2) what would happen if a Senate plan doesn’t come together?

We’ll know the details of the first question soon enough, but by all accounts, the Reid/McConnell agreement, if it exists, will not be a sweeping deal along the lines of a grand bargain. It would instead focus primarily on tax rates – the $400,000 income threshold increasingly appears to be a precondition for the GOP – extended unemployment insurance, the Medicare “doc fix,” the alternative minimum tax, the estate tax, and a series of tax incentives for businesses and families, many of which were included in the Recovery Act.

The Senate plan would not, if all goes according to plan, deal with the sequester, the existing payroll tax break, or the debt ceiling. Why not? Because Republicans still hope to continue work on a larger (grander) debt-reduction deal in the new year.

In other words, even if there’s unexpected progress today and tomorrow on Capitol Hill, some deadlines will go unmet and the stage will be set for yet another self-inflicted crisis in a couple of months.

While we wait to see if/when a Senate plan comes together, there is a contingency plan – apparently Democrats have a Plan B of their own – in the event McConnell and Reid can’t reach an agreement (or the Senate rejects their deal). On Monday, if all else fails, Reid will bring a simple package to the floor: lower rates on income up to $250,000 and extended jobless aid. That’s it. If Senate Republicans kill it, the deadlines will pass and Democrats will try again in 2013. If the Senate passes it and the House balks, we’ll see the same outcome.

Obama and Reid seem to like their chances: GOP officials don’t want their final act of this Congress to be a vote against middle-class tax breaks, and complete failure would almost certainly give Democrats leverage in the new year anyway.

It’s a holiday weekend, but I’ll keep readers posted on developments, and “This Week In God” will return a week from today.

Fiscal Cliff

Where things stand

Updated