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How Can Fiscal Cliff Deal Pass At This Late Hour?

December 28th, 2012 · No Comments · Economy

by Credit Info Center

(Last Updated On: December 28, 2012)

This afternoon, President Obama meets with Congress to make a last-ditch effort to avoid going over the fiscal cliff. But at this late hour, can anything really be done? Technically, yes. Realistically, eh….

As reported by Yahoo News, all of the following would have to fall in line in order for us to avoid going over the fiscal cliff:

  1. President Obama and House Democrat Harry Reid put forth a proposal that Senate Republican Leader Mitch McConnell agrees not to block with procedural steps that require 60 votes to overcome.
  2. The proposal passes the Senate.
  3. House Speaker John Boehner (Rep) presents the proposal to the House.
  4. The proposal passes the Republican-controlled House.

Presuming an agreement could be reached, it would likely include:

  • Extension of middle-class tax cuts
  • Increased tax rates for wealthier Americans
  • Delay of scheduled spending cuts
  • Extension of expiring unemployment benefits
  • Reprieve for doctors who face a cut in Medicare payments
  • Short-term measure to prevent dairy prices from soaring

Worst-case scenario? No deal is reached and the economy takes a hit that could send us back into recession. “Best-case” scenario? Congress strikes a deal before January 1, 2014. Most-likely scenario? No deal is reached by the deadline date, but when Congress convenes again in January, they negotiate a new deal swiftly enough to avoid economic catastrophe.

What do you think? Should Congress do whatever it takes to strike a deal before the January 1 deadline? Or are we better served by them waiting until next month when they’re not under the gun, so to speak, and both sides will be in presumably stronger positions to negotiate a better deal for us all?

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