The so-called fiscal cliff has politicians in Washington performing the political equivalent of a soap opera as they leave the country in suspense about whether they will manage to resolve a self-inflicted crisis in time to avoid a recession next year.
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Day after day, we hear about fruitless meetings, press conferences and announcements of the latest offer by the White House or Republicans, followed quickly by a rejection of that same offer by the other party, sometimes accompanied by gales of laughter.
The daily developments are reminiscent of those old cliffhanger serials that used to play at Saturday matinees, whether it was “The Perils of Pauline” in the silent movie days, “Flash Gordon” in the ’30s, or more recently TV series like “General Hospital,” “Lost,” or “Dallas,” starring the late great Larry Hagman. But instead of having to wait all summer to find out who shot J.R. Ewing, we have only a few short weeks left until the end of the year. Presumably congressional Republicans and the Obama administration can agree on some type of bargain by then, but there’s no guarantee.
Some would argue that the “fiscal cliff,” a term coined by Federal Reserve chairman Ben Bernanke, is really more like a gentle slope, and that the economy won’t suddenly plunge into a recession on January 1 if lawmakers and President Obama can’t find their way to a deal. It is probably true that there is an indefinite window of time for Congress to pass some type of fix after January 1 before the capital markets start going haywire. Presumably January 25 is a more realistic date to really start worrying, but this just seems like moving the goal posts back a bit.
In any case, if one of the major rating agencies like Standard & Poor’s, Fitch or Moody’s decides at some point to downgrade U.S. debt in response to the continuing uncertainty, the cost of borrowing could go up, forcing the government to pay higher interest rates and further limiting Washington’s available options.
Accountants and tax preparers also have good cause for angst, with IRS officials already warning that tax season could again be delayed next year unless Congress agrees soon on whether there will be a patch to keep the alternative minimum tax from spreading to millions more taxpayers (see IRS Warms AMT Could Affect 60 Million Taxpayers Unless Patched).
Still, the daily back and forth parrying between Speaker of the House John Boehner, R-Ohio, and President Obama, along with an ever-changing cast of lawmakers, pundits and other talking heads, does provide some entertainment on the cable news channels. Internet political news sites are also abuzz about the latest inside developments in Washington, such as Boehner’s Dr. Strangelove-like "Doomsday Plan," first reported by ABC News, under which Republicans would supposedly allow the tax cuts to pass for the middle class by simply voting “present,” but would not take any action on extending unemployment benefits, raising the debt ceiling or closing tax loopholes. Then we could wait until next year to see Democrats and Republicans fighting anew over these and other priorities.
On the Democratic side, House Minority Leader Nancy Pelosi, D-Calif., has her own plan for a “discharge petition” that would force a vote in the House on a bill already passed by the Senate for extending the tax cuts only for income below $250,000 a year (see Pelosi Plans to Bring Tax Cut Extension Bill to House Floor). She needs 218 signatures on the petition to force the GOP leadership to allow a vote on extending just the middle-class tax cuts. Pelosi reported Tuesday evening on MSNBC's "The Ed Show" that Democrats had gathered 150 signatures so far after Rep. Tim Walz, D-Minn., introduced the petition earlier in the day, and they would be back at the task on Wednesday. However, as Democrats only hold 192 seats in the House, she would need 26 Republican members to sign her petition, which she admitted is not likely to happen.
What with all these suspenseful ingredients—a struggle at the edge of the cliff, a Doomsday Plan and an urgent petition that needs to be delivered in time—it’s time for a superhero or Zorro, the Lone Ranger or Buck Rogers to come flying to the rescue. Instead we’re stuck with John Boehner.