President Barack Obama and Congress have not yet reached a deal to avoid the fiscal cliff, despite the fact that the January 1 deadline is only days away. It is looking increasingly unlikely that any agreement will be made before the set of automatic spending cuts and tax increases go into effect.
Attempts to solve the impasse before Christmas were unsuccessful, and Obama cut short his vacation to Hawaii to return to Washington for negotiations. Speaker of the House John Boehner announced Thursday he would call the House back in session this weekend. Obama invited members of both the Senate and the House to the White House Friday for talks, yet a deal looks unlikely because members of both parties might see more political benefit to avoiding a deal rather than reaching one.
By avoiding a bipartisan deal to avoid the fiscal cliff, Democrats would get the expiration of the Bush-era tax cuts they want. Republicans want to keep the tax cuts in effect for all earners, while Democrats want the richest Americans to pay more. The parties fail to see eye-to-eye on what the cutoff should be, with Obama originally proposing continuing the tax cuts for those earning less than $250,000 a year, and Republicans negotiating with a threshold closer to $1 million, though Boehner was unable to get enough Republican votes for his "Plan B" bill that would have raised taxes for those making more than $1 million. Democrats are also resistant to large cuts to entitlement spending, something Republicans demand to address the country's budget deficit.
Going into Friday's negotiations, Speaker of the House John Boehner said in a statement that he "will continue to stress that the House has already passed legislation to avert the entire fiscal cliff and now the Senate must act," hoping to put pressure on the Democrats.
If the parties fail to reach a deal, Boehner and the Republicans can blame Obama for raising taxes on all Americans come the first of the year. Sensitive to primary election fights in 2014, GOP representatives wish to avoid being seen as directly responsible for tax increases. If the country did go off the cliff, they would perhaps be able to negotiate the return of some of the tax cuts next year.
U.S. News contributing editor Peter Roff said both sides are clearly calculating how they can get the most political leverage out of a deal, or the absence of one:
Regarding the fiscal cliff there is a deal to be had and the politicians are silly to pretend otherwise. It's true that going over the cliff gets President Obama what he wants and could otherwise never get through Congress: high tax rates and significant cuts in defense spending. Once he has wrung as much political pain out of the Republicans as he can for "allowing America to go over the cliff"—and once the poll numbers start to shift and he starts to get some of the blame too—both sides will come to a deal that will probably restore the Bush-era tax rates for married couples making less than $250,000 per year and give Congress flexibility in managing the sequester. And that deal will hold until the federal government once again hits the debt ceiling, at which time the GOP will again have political leverage against Obama and the Democrats that control Harry Reid's Senate and more things will be changed.
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