With only a few more days left before the country plunges over the edge of the “fiscal cliff,” it is now the Senate’s turn to come up with a plan, not only be agreed upon in the Senate, but also one that can pass in the House before January 1, 2013. Seems like a pretty tall order, doesn’t it? Despite the inaction and inability to come to a compromise thus far, Democratic and Republican leaders are somewhat optimistic that a deal can be reached. Yesterday, at a news conference at the White House, the President pronounced that he is “modestly optimistic” that a deal can be reached.
Senate Minority Leader, Mitch McConnell, said he was “hopeful and optimistic.” However, McConnell also vowed his side would not
“write a blank check for anything Senate Democrats put forward just because we find ourselves at the edge of the cliff.”
And Senate Majority Leader, Harry Reid, immediately began preparing Senate Democrats and Republicans for what could be a difficult vote.
“Whatever we come up with is going to be imperfect. Some people aren’t going to like it. Some people will like it less . . . we’re going to do the best we can for. . . the country that’s waiting for us to make a decision.”
The developing package is thought to contain provisions which would protect nearly 30 million taxpayers from paying the alternative minimum tax for the first time; keep unemployment benefits going to 2 million people, who otherwise would be cut off in January; halt a steep cut in Medicare reimbursements set to hit doctors in January; and preserve popular tax breaks for both businesses and individuals, such as those for research and college tuition.
The two sides are still at odds over a crucial issue though: how to define the wealthy. Both sides agree that tax increases on the middle class will be detrimental and cannot happen. Republicans favor extending the Bush tax cuts for everyone, while Democrats favor increasing taxes on the “wealthy.” This is part of the problem though; there is no agreement on exactly who is considered “wealthy.” While Republicans probably are willing to compromise to raise taxes on the “wealthy,” whether that be those making over $250,000, $400,000, or $1million, remains to be determined, don’t expect much compromise until Democrats put together a plan to cut spending. There is another impending fiscal cliff, of sorts, that Congress needs to deal with, and that is the debt ceiling. Just over a year ago, S&P downgraded the U.S. credit rating, revealing weakness in the economic superpower. Avoiding reform and tackling the necessary spending cuts may lead the country to another credit downgrade in the near future.
At best, Congress will be able to come up with a sort of “stop gap” measure in order to avoid actually going over the fiscal cliff. Our government tends to run on “stop gap” measures, based on recent history. After all, an actual budget has not been passed in nearly 4 years, compelling Congress to pass “stop gap” measures in order to avoid a government shutdown on more than one occasion. We have known that the “fiscal cliff” was approaching for months, yet, as always, we are down to the wire waiting on Congress to pass something. We have grown to expect mediocrity—not great legislation, not good legislation, not even legislation that lawmakers think is best for our country—just something, anything to avoid catastrophe. A new Congress will be sworn in January 3, 2013. Can we expect real compromise and necessary reform at that point to tackle our debt and spending problem? Let’s hope so.