-Presidential, Hill Elections Will Clarify Key Players For 2013
-Both Parties Set to Mine Vote Results to Confirm Fiscal Views
-Business Leaders Continue To Implore Hill, Admin To Avert Fiscal Cliff
By John Shaw
WASHINGTON (MNI) – There are many features of the fiscal cliff that
defy common sense and require extensive counter-intuitive thinking.
As an example: while the resolution of the fiscal cliff lies
largely in the hands of the current 112th Congress, the negotiations
that lead to that resolution are likely to be shaped profoundly by
elections that determine control of the 113th Congress — and the
president who will occupy the White House in late January of 2013.
Analysts say Tuesday’s presidential and congressional elections
will be important to the coming lame duck fiscal cliff talks for both
psychological and practical reasons.
While the fiscal cliff has not been a central feature of
presidential or congressional campaigns, fiscal policy, at least in the
broad thematic sense, has been a major point of contention between the
two parties for the last two years and on the campaign trail.
If either party emerges from Tuesday’s elections as a decisive
winner, its leaders would presumably feel that they have strong
bargaining power on the fiscal cliff — and could either demand the
result they want during the lame duck session at the end of this year or
defer action until early in 2013.
For example, if former Massachusetts Gov. Mitt Romney is elected
president and the GOP retains control of the House, Republicans would
presumably prefer to defer fiscal cliff legislation until January of
2013 when they have considerably more power. Under this scenario they
are unlikely to be interested in negotiating with Democrats during the
lame duck session
But it is far less clear what will happen this fall if the
elections confirm the current power configuration with President Barack
Obama remaining in the White House, Republicans controlling the House
and Democrats the Senate.
“I think everyone hopes that the elections bring clarity — that we
have a clear outcome and know who the important fiscal players will be
going forward,” says Bob Bixby, executive director of the Concord
Coalition.
“But it is still incredibly hard to predict how the negotiations
will unfold after the elections,” he said.
Stan Collender, a budget expert at Qorvis Communications, said he
expects the election results will allow both parties to claim at least
partial victory — and to proclaim total validation for their current
fiscal stances.
“I just don’t think the elections are going to resolve much. I
think both parties will claim victory and stay locked into their fiscal
positions. I think we will have to go over the fiscal cliff before any
movement occurs — and that movement will be to resolve the fiscal cliff
not do a bigger budget deal,” he said.
Bill Frenzel, a former Republican congressman and now a guest
scholar at the Brookings Institution, said he expects the last six
weeks of 2012 to be a very difficult and complicated time.
“My sense is that things are going to be very messy at least until
Christmas, as Congress sorts through the election returns and figures
out who won, who lost, and who is in charge,” Frenzel said.
“The most likely result of the election is some reincarnation of
divided government. So the gladiators will have to go back to the table
and decide if they want to work together or keep clubbing each other. We
don’t know what they will decide,” he added.
Not surprisingly, the fall campaign has not brought about any
convergence in views on fiscal policy or lessened the acrimony between
the two parties.
When Romney said in recent weeks that his governorship in
Massachusetts illustrated his ability to work in a bipartisan fashion
and showed he would be able to persuade congressional Democrats to
cooperate with him if he is elected, Senate Majority Leader Harry Reid
released a withering response.
“Mitt Romney’s fantasy that Senate Democrats will work with him to
pass his ‘severely conservative agenda’ is laughable. In fact, Mitt
Romney’s Tea Party agenda has already been rejected in the Senate,” Reid
said in a statement.
“Senate Democrats are committed to defending the middle class, and
we will do everything in our power to defend them against Mitt Romney’s
Tea Party agenda,” Reid said.
House Speaker John Boehner has said he does not envision the lame
duck session as a time for broad budget talks, and he believes it would
be inappropriate for the outgoing Congress to make long-term fiscal
decisions.
Boehner also said he is “not confident” he can negotiate an
agreement with Obama to avert sending the nation over the fiscal cliff.
The fiscal cliff refers to the convergence of several significant
events: the expiration of the Bush era tax cuts and dozens of other tax
provisions at the end of this year; the first round of across-the-board
spending cuts that are scheduled to begin in January; and the need to
increase the statutory debt ceiling in the coming months.
Congress will reconvene Nov. 13, a week after the general
elections.
In a related matter, a group of investment firms have taken out a
full page ad Monday in the leading U.S. newspapers urging action by the
Congress and the White House to avert the fiscal cliff.
“America is facing an urgent crisis, barely discussed during this
fall’s election campaign: on January 1, more than $600 billion in
spending cuts and tax increases will automatically take effect — with
devastating consequences for our economy — if the President and
Congress fail to act,” it begins.
The group says the fiscal cliff is already causing uncertainty
which has curtailed investments by businesses across the nation.
“Regardless of the result on Tuesday, there will be no more
pressing issue for the American economy than finding a solution that can
steer our nation away from this rapidly approaching fiscal cliff and
towards a sustainable deficit reduction plan,” the ad says.
** MNI Washington Bureau: (202) 371-2121 **
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