9 Gloomy Experts Look Beyond the Fiscal Cliff
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The Fiscal Times
December 26, 2012

President Obama and Congress left behind a huge fiscal mess in Washington late last week as they departed for a brief holiday recess. Short of a Christmas season miracle, the nation will be headed over the fiscal cliff next week, with nearly $600 billion worth of automatic tax increases and spending cuts set to take effect.

House Speaker John Boehner, R-Ohio, threw in the towel after his “Plan B” for extending Bush era tax cuts to the 99 percent of Americans making less than $1 million a year failed to pass muster with conservatives in his caucus. He then called on Obama and Senate Democrats to find a way out of the political morass

Obama declared himself an eternal optimist and urged the two sides to cobble together a minimalist budget and tax deal before the end of the year that would prevent taxes from rising on the middle class. And a handful of Senate Republicans over the weekend endorsed Obama’s partial deal, even if it meant taxes would go up for the wealthiest Americans and that decisions on spending cuts would be put off until next year.

But with the two parties more polarized than ever on virtually every aspect of tax policy and deficit reduction strategies, the prospects for a year-end fiscal calamity that would spook the markets and undercut the economic recovery is looming large.  Many of the public policy and political experts and media hands who have been watching the latest high stakes budget debacle unfold are viewing the Christmas season through a very gloomy lens.

Here’s what nine of them have to say:

Robert D. Reischauer -- The former director of the Congressional Budget Office and a premier budget and economic prognosticator has been predicting for weeks that talks would fail and the government would plunge off the fiscal cliff. Now, in the wake of the Plan B fiasco, he’s more certain of that than ever.
 
“In a way I was thinking Boehner was sort of playing out the steps in a ritualized dance he had to go through, but part of that dance was to have his troops support him at this point. But he has been dealt a blow by his own members, no question about it. The president needs him to be strong to work with him. And the president’s only way of sort of moving this forward is to give a little more ground to Boehner. 

But Obama is right at the edge now, where if he goes much further he’s going to be in the same position that Boehner finds himself where much of his most loyal supporters say they won’t play ball. . . . As long as markets don’t react, we can sort of muddle through for a week or two, but at some point it begins to be a real problem.”

Ron Bonjean -- The Washington political consultant and former Republican Hill spokesman, has lost faith in the negotiations process and believes it will take powerful external forces – such as an uproar in the markets – to force the two sides into an agreement.

"We have sunk to the lowest common denominator in order to get a deal--sheer investor panic. The reality of a stock market crash is probably the only way Washington will strike a deal. It is likely the only scenario that could force the President and the Speaker to allow for a deal driven by Democratic votes to pass the House. A stock market dropping hundreds or thousands of points would allow Boehner to get a pass from his Republican members who can still mostly vote against a deal because of tax increases.”

Chuck Todd, NBC’s chief White House correspondent, speaking on “Meet the Press with David Gregory” on Sunday:

“We're going to get a small deal. It's a shame. . .  I think politically, the president's making a mistake to go for a small deal. He will lose leverage as the year goes on. He'll get a big political victory. But he should try one more time for the big deal. You had nearly 200 House Republicans about to vote to raise taxes on millionaires. That means you could get it up from a $400,000 threshold to 750? . . . A deal is within reach. I think go one more time. They seem to have had it. And they don't want to try Boehner one more time. But I think they're making a big mistake.”

John Zogby -- The veteran pollster and political analyst has given both Obama and Boehner failing grades for leadership and political acumen.

“Both sides are playing at brinkmanship at a time when the American people are looking for a deal. There is now less than a week to go, and this is not funny. In terms of the politics, the consensus is that the Republicans will be blamed for the lack of a deal.   . . . The president has to force the issue with Senate Majority Leader Harry Reid: pass legislation that offers tax cuts to those earning less than (let's say) $700,000. There were plenty of Republicans in the House willing to accept the Plan B target of $1 million. Then follow with a serious proposal to cut entitlements.”

Washington Editor and D.C. Bureau Chief Eric Pianin is a veteran journalist who has covered the federal government, congressional budget and tax issues, and national politics. He spent over 25 years at The Washington Post.