After a ‘fiscal cliff’ deal, what next?
The “fiscal cliff” was designed by Washington for Washington — it was intended to set up a scenario so severe that the president and Congress would, at last, have to take on the nation’s major tax and spending problems. Instead, lawmakers again found a way to sidestep many of the prickliest issues and in the process set up other, potentially more severe, showdowns in the new year.
The next big deadline is likely to come around the end of February, when the Treasury Department will exhaust the measures now in place to extend the nation’s $16.4 trillion debt ceiling. At that point, the government will not be able to pay its bills unless Congress votes to raise the nation’s legal borrowing limit.
Republicans hope to use that moment to force Obama and congressional Democrats to agree to major spending cuts in return for the increase — in what could be a sequel to the contentious face-off over the debt limit in the summer of 2011.
[I]n early March would come another deadline: the $110 billion cut in spending, half from the Pentagon, delayed as part of this deal.
A month or so later — on March 27 — a short-term measure that funds government agencies will lapse. Without a renewal, the government will shut down, setting up another possible showdown.
Many Republicans believe they’ll have more leverage then than they do now because the debate over tax rates on the wealthy will be settled.
In their view, Obama has been wielding a powerful rhetorical weapon: that Congressional Republicans were blocking a deficit-reduction deal and preventing tax cuts for the middle class because they refused to allow taxes to rise for the wealthy. But the deal reached late Monday, which allows rates to rise for individuals making more than $400,000 a year and couples earning more than $450,000, would remove the issue from discussion.
Republicans figure that will tilt the debate toward spending cuts.
This outcome was neither side’s first choice.
Obama wanted to take care of raising the debt ceiling as part of the fiscal-cliff solution.
“It should be part of the deal,” White House press secretary Jay Carney said on Dec 4. “It should be done, and it should be done without drama.”
But it wasn’t.
Similarly, Republicans wanted to take a significant whack at the entitlement programs whose growth will contribute most significantly to the nation’s debt.
In order to garner Republican support for new revenues, the president must be willing to reduce spending and shore up the entitlement programs that are the primary drivers of our debt,” House Speaker John A. Boehner (R-Ohio) said the day after the November election.
That didn’t happen either.
And there’s no guarantee a resolution becomes any easier in 2013.
On Thursday, 12 new senators and 67 new House members take office, many fresh off campaigns in which they made promises to their partisan supporters not to yield on fiscal issues.