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| Version 1 | Version 2 |
|---|---|
| Fiscal cliff deadline: what happens next | Fiscal cliff deadline: what happens next |
| (about 1 month later) | |
| No deal and the country goes over the fiscal cliff | No deal and the country goes over the fiscal cliff |
| All taxpayers will face a rise from January 1. People sanguine about events in Washington at present, making the assumption that the two sides will reach a last-minute deal as they so often do, will suddenly wake up and begin bombarding their members of Congress. | All taxpayers will face a rise from January 1. People sanguine about events in Washington at present, making the assumption that the two sides will reach a last-minute deal as they so often do, will suddenly wake up and begin bombarding their members of Congress. |
| Combined with the tax rises will be automatic, across-the-board cuts in federal spending, from defence to welfare. | Combined with the tax rises will be automatic, across-the-board cuts in federal spending, from defence to welfare. |
| This is not necessarily bad news for Barack Obama, with the Republicans almost certain to get the blame. Tax rises and spending cuts, if left in place, will also help Obama balance the budget. | This is not necessarily bad news for Barack Obama, with the Republicans almost certain to get the blame. Tax rises and spending cuts, if left in place, will also help Obama balance the budget. |
| The downside is that tax rises would almost certainly have a negative impact on the country's fragile economic recovery, as will the general state of uncertainty. | The downside is that tax rises would almost certainly have a negative impact on the country's fragile economic recovery, as will the general state of uncertainty. |
| A deal after January 1 | A deal after January 1 |
| House speaker John Boehner was unable to get Tea party-backed Republicans and other ultra-conservative members of his caucus to vote for tax rises. It just went against all their instincts. If the country goes over the fiscal cliff and everyone's taxes go up, any post-January 1 bill would be a vote on bringing these taxes down, except for the wealthiest. That would remove ideological objections. These Republicans would then be able to go back to their districts and say they voted for tax cuts, not rises. | House speaker John Boehner was unable to get Tea party-backed Republicans and other ultra-conservative members of his caucus to vote for tax rises. It just went against all their instincts. If the country goes over the fiscal cliff and everyone's taxes go up, any post-January 1 bill would be a vote on bringing these taxes down, except for the wealthiest. That would remove ideological objections. These Republicans would then be able to go back to their districts and say they voted for tax cuts, not rises. |
| A deal before January 1 | A deal before January 1 |
| The House broke up on Thursday night and the Senate goes into recess Friday afternoon. But negotiations between the White House and the leaders on Capitol Hill can continue over the holiday season and if there is a deal in place, both chambers can be recalled at short notice for a the necessary votes before January 1. | The House broke up on Thursday night and the Senate goes into recess Friday afternoon. But negotiations between the White House and the leaders on Capitol Hill can continue over the holiday season and if there is a deal in place, both chambers can be recalled at short notice for a the necessary votes before January 1. |
| It is difficult to see what there is left for Boehner to do. He could not get Republicans in his caucus to accept the deal he was negotiating with Obama and he could not get them to accept his own proposed 'plan B' bill either. Boehner acknowledged his weakness in his statement on Thursday night, passing the buck to the Senate. | It is difficult to see what there is left for Boehner to do. He could not get Republicans in his caucus to accept the deal he was negotiating with Obama and he could not get them to accept his own proposed 'plan B' bill either. Boehner acknowledged his weakness in his statement on Thursday night, passing the buck to the Senate. |
| So often over the last few years, compromises have been forged in the Senate between the Democratic majority leader Harry Reid and his Republican counterpart MItch McConnell. The Senate is relatively immune from the influence of the Tea Party, making bipartisan agreements more likely. One of the problems this time round is that McConnell, at least until now, has shown little interest in 'fiscal cliff', leaving it mainly to Boehner. That might have to change now. | So often over the last few years, compromises have been forged in the Senate between the Democratic majority leader Harry Reid and his Republican counterpart MItch McConnell. The Senate is relatively immune from the influence of the Tea Party, making bipartisan agreements more likely. One of the problems this time round is that McConnell, at least until now, has shown little interest in 'fiscal cliff', leaving it mainly to Boehner. That might have to change now. |
| There could be a quick bill to prevent taxes going up for most people on January 1. It would just be a matter of the Democrats and Republicans agreeing on the threshold: tax rises for everyone earning more than $250,000 a year as the Democrats want, or the $400,000 that Obama has already agreed to, or, very unlikely the $1 million mark that Boehner proposed. | There could be a quick bill to prevent taxes going up for most people on January 1. It would just be a matter of the Democrats and Republicans agreeing on the threshold: tax rises for everyone earning more than $250,000 a year as the Democrats want, or the $400,000 that Obama has already agreed to, or, very unlikely the $1 million mark that Boehner proposed. |
| Obama is in a strong position and may not agree to a short-term bill that does not deal with at least the raising of the debt limit on federal spending. Without an agreement that addresses that for the next year or two there will be another stand-off this spring and summer and again the year after. Obama does not want his second term dominated by stand-offs with Congress. | Obama is in a strong position and may not agree to a short-term bill that does not deal with at least the raising of the debt limit on federal spending. Without an agreement that addresses that for the next year or two there will be another stand-off this spring and summer and again the year after. Obama does not want his second term dominated by stand-offs with Congress. |
| Some of the bigger issues might have to wait until after January 1. How deep will the spending cuts be? How much will come off defence, which the Republicans want to protect as much as possible, and how much from entitlements, which the Democrats want to protect? A fresh look at tax reform? | Some of the bigger issues might have to wait until after January 1. How deep will the spending cuts be? How much will come off defence, which the Republicans want to protect as much as possible, and how much from entitlements, which the Democrats want to protect? A fresh look at tax reform? |
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