The nation is just five days away from the New Year. And as we’ve all heard more than a year now, the New Year will bring tax increases and federal spending cuts.
There is no deal in sight, though leaders may try and push a pared back plan to avert the fiscal cliff.
Congress and President Barack Obama took the last few days off to enjoy Christmas. Today the Senate and President are back in Washington, but the House will enjoy a few more days off. Representatives aren’t due back at the Capitol until Sunday.
But it’s unclear whether members are coming back to vote on a bill to stave off the fiscal cliff.
Speaking last Friday evening, Mr. Obama told reporters it’s time to scale back ambitions.
He said Congress should pass a bill, “that prevents a tax hike on middle class Americans, protects unemployment insurance for 2 million Americans, and lays the groundwork for both further work and deficit reduction. That’s an achievable goal.”
That bill does not exist yet.
Jason Peuqeut, the research director at the Committee for a Responsible Federal Budget, says the President’s latest proposal would increase taxes on household income above $250,000.
“You’re only going to get 7, 8, maybe 900 billion dollars in savings over 10 years from that,” Peuqeut said. “That’s nowhere near enough to put the debt on a stabilized level of the economy and actually reduce it over the long term.”
Peuqeut, who wears a red bracelet that says inaction is not an option, says all proposals from Congress and White House thus far are too small. They would only stabilize the debt – not reduce it.
“Lawmakers need to put in place about 3-4 trillion dollars in new savings to put debt on a clear, downward path later this decade. That clear downward path is such an important metric because it gives us some wiggle room. If economic projections aren’t quite what we think they are, if they’re a little bit worse. If healthcare costs grow a little bit faster than we’re currently projecting, it’s okay. We have some wiggle room,” Peuqeut said.
The Senate is preoccupied with a disaster relief bill that is unlikely to get a vote in the House this year. It’s also slated to pass an intelligence bill.
At a vote this evening, Senator Mark Begich placed blame for the lack of movement squarely on the Republican controlled House. He wants them to pass a Senate bill that would extend the current tax rates for income below $250,000.
“The House has had a similar plan – not the unemployment benefits – but everything else. They’ve sat on that since July. My view is: They could just pop that loose, and we’d be out of here in an hour,” Begich said.
Senator Begich would not say whether the proposed stop-gap would save enough money to delay the spending cuts set to take effect next week. He says Congress needs to accept the coming spending cuts.
Passing a small package may provide Congress with political cover for delaying the cuts. Jason Peuquet says Congress has had more than enough time, every delay makes a bigger deal harder.
“This is kind of setting itself up to be a series of small deals. We had the Budget Control Act back in the summer of 2011. If this plan manages to go through the House and Senate and get signed by the White House, it would kind of be a stage two in all of this. And we’d have to come back to the table,” Peuqeut said.
The number two Democrat in the House, Steny Hoyer, offered a philosophical prediction for the coming days.
“If you have 10 problems, solving one problem is not bad. Solving 10 is wonderful. But you ought not have the solving all of them be the enemy of the solving of any of them,” Hoyer said.
Translation: If there is a stop gap measure coming, don’t expect it to do much.