Fiscal cliff deal seems near

President Obama and Speaker John Boehner are making compromises. Will common sense prevail over politics?

By Jonathan Berr Dec 18, 2012 4:54PM
Image: Dollar bills floating over U.S. Capitol -- CorbisA deal seems closer Tuesday to resolve the fiscal cliff, a noxious $600 billion cocktail of draconian government spending cuts and devastating tax increases set to kick in at the end of the year. The whole thing can easily fall apart too.  Things are that tenuous.

Both President Barack Obama and House Speaker John Boehner have compromised in recent days in effort to avoid sending the economy into a new recession. Obama is willing to accept tax increases on households earning $400,000 or more, well above the $250,000 level that was a focal point of his campaign for reelection. Boehner, for his part, has accepted the idea that taxes will have to be raised on the wealthiest Americans. The fact that both sides are willing to compromise is good news, experts say.

"If I were making a bet, I would say that they would have a deal before the end of the week and certainly before the end of the year," said Dean Baker, co-director of the Center for Economic Policy Research, in an interview.

Baker's sentiments were echoed by Greg Daco, a senior economist at IHS Global Insight, who wasn't willing to predict an imminent deal but was positive nonetheless. "I feel better than I did last week in terms of a deal getting reached," he said.

One sure sign of the progress in the talks between Obama and Boehner is the grief both leaders are getting from their respective political bases. Former Clinton labor secretary Robert Reich became the latest political progressive to fret over the "obsession" in Washington over budget deficits at a time when millions of Americans remain unemployed.

"In the foreseeable future our government has to spend more rather than less," he wrote on his blog. "Businesses won't hire because they still don’t have enough consumers to justify additional hires. So to get jobs back at the rate and scale needed, government has to be the spender of last resort."

Fiscal conservatives, such as the Alison Acosta Frazier of the Heritage Foundation, are furious with Boehner for demanding too little from Obama in terms of spending cuts and for agreeing to tax increases.

"So the two sides should reject both of these bad choices, take a breather, and pass a simple extension of all current policy -- all tax policy, all spending policy without sequestration cuts -- until the end of March," Fraser writes on Heritage's website, adding that March is when the current legislation funding the government expires.


Meanwhile, Boehner is pushing what he calls "Plan B," a bill that would raise taxes only on on those earning income above $1 million while leaving in place across-the-board spending cuts that both parties want to avoid. The White House, not surprisingly, is opposed to this idea.  


Rhetorical bluster aside, the fact that both sides are wiling to compromise indicates they are taking the task ahead seriously.  The sad part is the fact that people are making a big deal of the fact that Democrats and Republicans are coming together for the common good.


After all, isn't that what they were elected to do?


--Follow Jonathan Berr on Twitter @jdberr. 


More from Money Now

29Comments
Dec 19, 2012 2:11AM
avatar
What kind of compromise is this that has minimal spending cuts and discipline?;  No family in the country can continue spending more than they have and expect to get out of the hole.  M ost rational people would say show me the cuts and your seriousness in addressing your spending before we give you more of our hard-earned  cash.  Moreover, with $17 trillion in debt and growing, our debt is  huge.   Obama's focus only on more taxes is cynical.
Dec 19, 2012 12:17AM
avatar
So, the poor and the working class will be thrust ever deeper into misery- yes, Jonathan, bipartisanship at its bourgeois finest! NO deal is better than a BAD deal!!!! If we're lucky, common sense will be thwarted- but I wouldn't bet on it. Poverty, racism, homelessness, FIRE- sector Capitalism- the REAL four horsemen of the Apocalypse- ready to ride roughshod on Black, Brown, and Poor people near you!!!
Dec 18, 2012 11:29PM
avatar
common sense would dictate the best thing to do is to both: go over the cliff and then slam into the debt limit. Anything else is enabling the debt addict.
Dec 18, 2012 10:21PM
avatar
When are we going to face the fact that we cannot continue to tax and spend our way to a better future? If we are to be responsible as a nation, we cannot keep automatically raising the debt ceiling to keep our economy upright and supply our government's every want.  When we reach the inevitable end and collapse, we will sink the whole world's economies as well because we have been living at their expense or they have been living on our dole depending on the situation. Shame on us and our convoluted thinking and voting. 
Dec 18, 2012 10:11PM
avatar

Boner's compromise was already shredded. What a moron. Selective tax increases for this group and others for that. What's the matter with the voters in Ohio? This guy sounds like he drinks himself into a stupor nightly then gets handed some cock and bull proposal worked up by that Nazi- Eric Cantor. He works directly for the Koches and the Bushes, right? Impeach them both and let's put cooperation in where NWO has been occupying. The article is about commonsense. Sense says-- stop talking and go over the cliff, rebel, shred paper and crush buttons... it befuddles administrators who can't boil water. One Hell of a lot of cheese is about to get moved. Everyone previously victimized by these crooks has known shift and dealt with it. I suspect the buffoons who ruined America can't, and we are in for some genuine entertainment just before we tar and feather the lot of them.

 

Not all stupid people are GOP, but all GOP are mighty stupid people.

Dec 18, 2012 9:24PM
avatar
Yes, common sense would resolve the problems in Washington.  But where in that city are you going to find any???
Dec 18, 2012 7:37PM
avatar
The best thing would be for the cliff to happen, it would stop spending and reduce the deficit!!!

It wouldn't hurt anybody to get less from the government.....

I don't get any freebies, so let it happen!!!!!

People need to get off their asses and fend for them selves!!!!!!!!!!!!!!!
Dec 18, 2012 7:19PM
avatar
I'm pretty upset with myself for voting for the imbumbents from my state this last election.  These guys are ridiculous.
Dec 18, 2012 7:15PM
avatar
Why is it they are still called democrats and republicans.  All of the "normal" people, myself included here, sees clearly that there is only one party in control now. It is called the republicrats. Or easier still the WALL STREET CABAL.  If you don't have lots of money you need not reply.  So now the greedy bastards are plying there way gleefully into social security.  The politicians really believe we can't see through the ruse and and just rushing headlong into OUR ability to live with some dignity. It's like everything else, there is the bully that pushes and pushes until he finds the limit and subsequently finds himself on his ****.  That is were the politicians are heading only they aren't going to be on their collective butts.....there going to have there heads placed on public guillotines.  Look to the russian bolsheviks and sailors right before communism became the way of government and you can see it coming.  Secession from the union is just the start......and the guns are going to be on the peoples side....not the crooks from wall street. And it has gotten so that their is NO place in the world these crooks are welcomed.
Dec 18, 2012 7:03PM
avatar
gee, if Obama raises the limit to $400,000, I can tell my husband we won't need to get divorced. Married the cap is $250,000. Divorced we can each make $200,000. If they don't raise the limit we will be forced to file bankruptcy with the $250,000. Cost of living is just too high, property taxes are too high, state taxes are too high, sin taxes, gas taxes, sales taxes, business regulation license fees, medicare taxes, social security taxes, unemployment taxes. and on and on________________ (the blank space is for you to add your own.) After I file bankruptcy I can get on the receiving end, Home heating assistance, rent subsidy, food stamps, medicaid, free cell phone, wardrobe allowance of $3,000. for job interviewing, Thanks Obama, I am loving you more by the minute, now that I am a taker instead of a taxpayer. Let's see, also I get a new washer and dryer and if I move often enough I can sell the 8 a year I get on Ebay and make a little spare cash. And let's not forget the exrra money I can get by having more kids. Please add to my list if you know more free stuff I can get. _____________________    
Dec 18, 2012 6:52PM
avatar
Dec 23 or maybe Dec24 at the latest (after an allnighter) they'll play kick the can, and dislocate their shoulders trying to give each other a reacharound pat on teh back. Not one second before.
Dec 18, 2012 6:44PM
avatar

there is no way that they can pass anything through both houses and get it signed by the president before the 1st.

all of this is just bull to keep the markets from tanking.

Dec 18, 2012 6:36PM
avatar
Any deal will fall far short of what measures are necessary to reduce spending to a levels that can avoid a financial collapse in the future. Without drastic cuts in spending and growth generated increases in revenues the deficit will balloon to over 200% of GDP in a few years time. That will put us in the same boat as other nations like Greece. Both sides will just extend and pretend and kick the can down the road.
Dec 18, 2012 6:17PM
avatar
It seems most Americans and everyone in this comment string is against more gun control knowing it is useless, but, for more education. Do you think the majority will rule here? Do you think this will matter at all? or do you feel we as citizens have any more say at all? This is the real problem, We will be called crazy by the minority and the press that no longer is balanced or impartial. We will feel no longer represented, That is dangerous, That is scary, That my fellow brothers and sisters of America is what will happen, goodbye freedom we will miss you.
Dec 18, 2012 6:10PM
avatar
So, both Obama and Boehner have agree on tax increases and that means both are compromising.

Any spending cuts yet?

Dec 18, 2012 5:56PM
avatar
This Jonathan Berr wonders if common sense will prevail over politics in Washington.  Hey Jonathan, congrats - you win the "naive dumba$$ of the day" award.  Take the rest of the year off and re-examine the last hundred years of political history and then come back and repent.  Your New Year's resolution should be to never write another article from such a misguided viewpoint ever again.

NO SOUP FOR YOU!   NEXT!!!!!!!!!!!!!!!!!!!

Dec 18, 2012 5:55PM
avatar

A solution to our FISCAL PROBLEM is SIMPLE (but not easy to get congress to enact):

28th constitutional amendment: Yearly Balanced Budget Required

Balanced definition:

Debt to GDP ratio

>35% = balanced             

<35% = allow 10% extra yearly spending

Dec 18, 2012 5:38PM
avatar

It's a mistake. Begin on January 3, 2013, to walk back to an agreement. Crap will come from working anything out while there is time to spare.

 

The sharpest concentration of the mind will NOT be available to all parties until the first 10 days of the new year. The outcome will still be crap, but it will be the absolutely best crap possible. And isn't that what we all deserve?

Dec 18, 2012 5:37PM
avatar
Makes perfect sense for Budweiser to fight this..if they don't then they would be forced to make better beer and that would be awful.
Report
Please help us to maintain a healthy and vibrant community by reporting any illegal or inappropriate behavior. If you believe a message violates theCode of Conductplease use this form to notify the moderators. They will investigate your report and take appropriate action. If necessary, they report all illegal activity to the proper authorities.
Categories
100 character limit
Are you sure you want to delete this comment?

DATA PROVIDERS

Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.

Trending NOW

What’s this?

MARKET UPDATE

[BRIEFING.COM] Equity indices continue holding modest gains with participants awaiting the public debut of Alibaba.com (BABA), which will represent the biggest initial public offering to date. According to recent indications, the stock is expected to open in the $90-91 range after pricing at $68/share.

On a separate note, the Dollar Index (+0.4%) hovers near its best level of the session, which also represents the high water mark from June 2013. The greenback holds gains against ... More

MSN MONEY'S