Convoluted weekend negotiations began yielding some hints Sunday on how lawmakers intend to avoid going over the fiscal cliff this week.
If no deal is reached today, billions of dollars in ten-year spending cuts and tax increases across all income levels will technically kick in on Tuesday. Lawmakers are trying to avoid that deadline, but until a series of late-night negotiations between Vice President Joe Biden and Senate Republican leader Mitch McConnell, things looked so stuck that some lawmakers began predicting we'd actually go over the cliff.
So what would happen then? Economists generally agree the American economy will plunge into a recession if it feels the full effects of the fiscal cliff over the course of 2013, but that’s not going to happen first thing Tuesday morning. Congress can still pass legislation after we’ve “gone over the cliff” to undo most of the ill effects before they begin to take their toll — and faced with the prospects of a self-induced recession, that would seem likely.
So, to extend the metaphor, while lawmakers may very well push the country over the cliff tonight, there’s still a chance we’ll grab the ledge and pull ourselves back onto solid ground sometime in the new year.
Here are some good fiscal cliff links to take a look at this morning, explaining what exactly happened during this weekend's negotiations.
- If we get a cliff deal today, CNN breaks down what it might look like.
- Talking Points Memo has a quick summary of this weekend’s deliberations. It includes this depressing sentence: “The parties remain divided over key tax and spending issues including the estate tax, the alternative minimum tax, capital gains tax rates, top-bracket income tax rates, unemployment benefits, Medicare physician payments, the sequester and the debt limit.”
- Wall Street economists tell the Washington Post the economy can avoid a recession if a fiscal cliff deal is reached by the end of January, but it’ll begin to hurt a lot more after that.
- The Post helps you calculate your 2013 tax increases, whether we go over the fiscal cliff or not. Because several Affordable Care Act provisions kick in next year, and because neither party has any interest in renewing the payroll tax holiday, everyone can expect heftier tax bills in 2013 — though it’ll hurt a lot more if we go full bore over the cliff.
- Minnesota Democrat Collin Peterson tells the Star Tribune he’s warming to the idea of plunging over the cliff — and staying there.
- A few other Minnesota Democrats talked about the cliff this weekend, though nothing was particularly groundbreaking. Tim Walz remains optimistic that a deal can be done; Keith Ellison told MSNBC there should not be cuts to entitlement spending, though progressives are willing to be flexible to pass a final deal; and Betty McCollum gave a floor speech pledging to help pass an extension of Bush-era tax rates on those making less than $250,000.
Devin Henry can be reached at dhenry@minnpost.com