Congress refuses Americans a fiscal cliff deal for Xmas

The US Congress and President Obama have left town for Xmas without any deal to avoid the "fiscal cliff" at the end of the year. The vision of a grand scheme is long gone. What remains is at most some temporary fix or stop-gap solution.

The fiscal cliff negotiations seem to have gone nowhere after promising developments that saw both sides compromise to some extent. However with speaker Boehner failing to pass a bill through the house that would see a tax rise only for those earning a million dollars a year, it seems clear that the Republicans are not willing to compromise at all on taxing the rich. There is no possibility of any grand bargain it would seem.

The solution, if there is one, will surely be a last minute temporary fix that will put off most significant decisions on into 2013 but will at least avoid the possible recession that would probably result if the fiscal cliff is not avoided. The fix would simply pass the difficult task of making spending cuts and raising taxes the first task of the new government early next year. At the same time, the issue of the debt ceiling will immediately start a new snarly debate no doubt.

Obama still hopes for a deal that would extend benefits for the long-term unemployed, and keep the Bush era tax cuts for most Americans. While Obama would like to see the tax cuts expire for those earning over $250,000 a year, he might be forced to raise the level somewhat to have the Republicans agree. However, given the failure of Boehner's plan B even that may not be possible. A Boehner spokesperson said that Obama has failed to offer a solution that meets the Republicans test of balance. Republican McConnell suggested passing a house bill that would extend tax rates for all Americans and then push for comprehensive tax reform next year. Obama has said over and over that he would not opt for any deal that did not raise taxes on the rich

Some representatives seem resigned to going over the cliff. Republican Patrick Tiberi said:"I think we're going to go over the cliff. I don't see something getting done." Economist Steve Blitz said that if "fiscal cliff" negotiations actually stretch into the new year, the stock market will probably decline increasing pressure for a deal to get done.

Obama struck a more optimistic note as everyone left on Friday for an Xmas break: “Call me a hopeless optimist, but I actually still think we can get it done. This is something within our capacity to solve. It doesn’t take that much work. We just have to do the right thing.” While Obama sounded optimistic, he gave no hint of why such optimism was warranted given the present impasse. Obama continued: “I am still ready and willing to get a comprehensive package done. As we leave town for a few days to be with our families for the holidays, I hope it gives everybody some perspective. Everybody can cool off. Everybody can drink some eggnog, have some Christmas cookies, sing some Christmas carols, enjoy the company of loved ones.” Perhaps Obama is just trying to spread some Xmas cheer.

Boehner seemed to have the more accurate description of the situation when he said Friday that “God only knows” how Washington can avoid the "fiscal cliff". However, Brenda Buck spokesperson for Boehner said that "Speaker Boehner will return to Washington following the holiday, ready to find a solution that can pass both houses of Congress.” So far it sounds as if they are about as ready as the NRA is to fight for more controls on guns.