The Election Is Over, But Fiscal Cliff Still Looms

Nov 10, 2012
Originally published on November 10, 2012 8:23 pm
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There's a competing set of priorities on either end of Pennsylvania Avenue here in Washington, D.C., and the deadline for resolving that competition is fast approaching. At the White House, the president says he won't accept a deficit reduction deal without a tax increase on the wealthiest 2 percent of Americans.

And on Capitol Hill, congressional Republicans say any tax hike is a conversation ender. And by December 31st, without a compromise, an automatic trigger is set, a trigger that will cut more than a $1 trillion from the federal budget. It'll also raise taxes on nearly everyone and very likely plunge the country back into recession.

Today and tomorrow on the program, we're going to be looking at the aftermath of the election, what could happen in the immediate future and what might happen beyond. Our cover story today: Is there room for compromise? In a moment, we'll talk with two departing senators about that very question. But first, let's go to our Mara Liasson to talk more about the so-called fiscal cliff I just described above.

And, Mara, walk us through the next six weeks. What can we expect?

MARA LIASSON, BYLINE: Well, the next six weeks, the president and the Congress are going to try to figure out how to get out from under the trap they set for themselves when they failed to come to a big deficit reducing agreement. They said if we can't agree, we're going to have automatic deficit reduction in the form of automatic spending cuts and tax hikes because the Bush tax cuts have always been set to expire at the end of the year.

That has nothing to do with this president and this Congress. When they were passed, they were sunsetted after 10 years, and now they're going to go away. So between now and the end of the year, they need to come up with a deal to avoid the automatic sequester and tax hikes, because that would harm the economy, while at the same time, setting up some kind of a framework for a bigger entitlement reform/tax reform plan that will take more than six weeks to work out.

RAZ: Mm-hmm. Well, the president has already said, look, I'm not going to compromise on this. I - we need to raise taxes on the top 2 percent in the country. This morning, The Wall Street Journal, Mitch McConnell is quoted by saying: Let me put it very clearly. I am not willing to raise taxes to turn off the sequester. Period.

LIASSON: Well, that is the minority leader in the Senate, Mitch McConnell. The most powerful Republican in Congress, John Boehner, the speaker of the House, was very clear this week. He said, we will raise tax revenues. He just doesn't want to raise tax rates. You can shrink the differential between capital gains and regular income. You can get rid of deductions. There are a lot of different ways to do it.

John Boehner has signaled that he doesn't want to compromise his principles, but he is willing to compromise with the president. And the president has signaled the same thing, even though both men - and those are the most important men - I think Mitch McConnell is important because he will lead the filibuster in the Senate of Republicans.

RAZ: If they do that, yeah.

LIASSON: If they do that. But both men, Boehner and President Obama, have come to agreement before. They weren't able to sell what they agreed on. But the parameters of a deal are out there, and it involves raising a certain amount of revenue for deficit reduction through tax reforms.

RAZ: Mara, if the president has already put his cards on the table and said - and has said, look, we have to raise taxes on the top 2 percent. I mean, what does that mean? Is he going to call Republicans' bluff on this and say, let's go over the fiscal cliff?

LIASSON: Well, he has said that he's going to veto anything, any bill that would extend the Bush tax cuts for the rich. Now, he's already said he wants to extend the Bush tax cuts for people earning 250,000 and below. And as a matter of fact, there's universal consensus on that, and that's the president's line. He says, everyone agrees that for 98 percent of Americans who make $250,000 or less, let's just extend the tax cuts for them because everybody agrees to do that. And then let's fight about the top 2 percent.

What he's trying to do is box the Republicans in to defending tax cuts for the rich while they're also talking about changes in entitlements and deficit reduction and spending cuts that would hurt the middle class.

RAZ: But if they have...

LIASSON: That's his strategy. But there are a lot of ways to make the rich pay more without raising their tax rates.

RAZ: That's NPR's national political correspondent Mara Liasson. Mara, thanks.

LIASSON: Thank you.

RAZ: Senator Joe Lieberman of Connecticut, an independent, is retiring after 24 years in the Senate. And normally, he'd be busy packing up his office and saying goodbye, but Congress still has six weeks to go before this session is officially over. And unlike previous lame-duck sessions, there is a lot of work to be done this time around. So I asked the senator just how important this session is.

SENATOR JOE LIEBERMAN: I don't think that there has been one as consequential as the lame duck of 2012. And primarily, of course, because of the so-called fiscal cliff. I mean, if Congress does nothing - and Congress has gotten pretty good at doing nothing, then there are enormous cuts in spending programs that go in automatically and enormous increases in taxes. Together, if nothing's done to stop them, I think they'd put America back into a recession.

RAZ: Senator Lieberman, you, of course, are an independent. You refused to endorse any candidate for the presidency this time around. You know how the American public views Congress, especially this last Congress. They're the least popular in modern - since the question was asked - has been asked. Nine percent or something of Americans had faith in this Congress. Do you think that it was because the president was unwilling to compromise?

LIEBERMAN: No. I mean, that may be part of the problem, but we've forgotten how to compromise. If you go into every big legislative discussion with the position that I will only vote for this if I get 100 percent of what I want, then the odds are you're going to get zero percent, and that's got to stop. I think that's what the American people want us to do. I believe, based on the first post-election statements by President Obama, Speaker Boehner, Senator Reid, that that's the message they've gotten. And now, we've got to really do the hard work and do it quickly.

RAZ: Are you optimistic that starting January 3rd, 2013, the new Congress and the president will actually get things done?

LIEBERMAN: Well, it's hard to be optimistic. And I got to tell you, I'm by nature an optimistic person, because the reality is in the Senate that there are going to be fewer moderates in both parties who are going to be here. And I think the key is going to be President Obama. And here he is re-elected with a real mandate. And I think he's going to focus in now on the fiscal crisis in America.

RAZ: That's Senator Joe Lieberman, the outgoing independent senator from Connecticut. Senator Lieberman, thank you so much.

LIEBERMAN: Thank you, Guy. Be well.

RAZ: Another retiring senator is Kent Conrad. He's been the chair of the Senate Budget Committee since 2006. And when I spoke to him, I asked if there's a congressional game plan for avoiding the fiscal disaster.

SENATOR KENT CONRAD: Well, what is happening in terms of what I'm experiencing is the group of eight - four Democrats, four Republicans - that have met for a year and a half to try to find common ground continue to work. We had a two and a half day retreat during the break with Erskine Bowles and Alan Simpson - former Senator Simpson. And we continue to work to see if we can't find common ground.

I know the leadership on all sides is certainly sounding the right note, that this is a time to act. Senator Reid made that clear, that it's better to dance than to fight. I thought Speaker Boehner made a very constructive statement. And, of course, the president has already indicated that he's prepared to work across the aisle to get a result for the country.

RAZ: Senator Conrad, are you confident that this fiscal cliff will be avoided before this new Congress is sworn in on January 3rd?

CONRAD: I am confident that there is going to be action to avert the fiscal cliff. Whether or not all of the action occurs before the end of this year, I can't be certain of that. I do think there's a good chance that a framework agreement can be reached - that is how much savings should be obtained out of the various accounts, how much revenue needs to be raised. But the specifics are clearly going to have to be left to the first of next year.

RAZ: You are, of course, retiring from the Senate. Although this election was a victory for Democrats, the balance of power remains more or less the same. The last two years of this Congress were years of gridlock. Given that the balance of power is unchanged, how do you expect the next two years or four years to be any different?

CONRAD: Reality. All the tax cuts expiring, the very steep spending cuts contained in the sequester, the fact that the alternative minimum tax will affect about 30 million people if nothing is done about it, that doctors who treat Medicare patients will see a cut of nearly 30 percent if nothing is done, that the payroll tax holiday ends, that the debt limit of the United States is going to have to be extended - these are facts.

And it is not going to be easy to kick the can down the road as it was in the last two years. Look, hope springs eternal, and I think the president has clearly said he is prepared to work with both sides to achieve a result. Senator Reid said it, the Democratic leader in the Senate. Speaker Boehner said it, much to his credit, I think.

Really, the only discordant note was Senator McConnell, and one would hope that as he reflects on what the country needs, he, too, will realize this is an opportunity to do something extremely important for the country. And if it's not done, I think there'll be grave consequences for the economy and grave consequences for those who refuse to act.

RAZ: As you begin to reflect on the end of your time in the U.S. Senate, do you feel that you are leaving an institution that has failed the American people or that has served it well?

CONRAD: I am very hopeful that despite the very bad performance of the last two years that people on both sides of goodwill are ready to come together and do what simply must be done for the sake of the country. And if they don't, they should pay a terrible price, which would be booting them out of office.

RAZ: That was Senator Kent Conrad. He's retiring after 26 years in the Senate.

Tomorrow on the program, we're going to take a look ahead at what the next Congress might tackle, what could happen with the Supreme Court, and, of course, the next big election, 2016. But coming up in a moment, the incredible rise and downfall of General David Petraeus. Transcript provided by NPR, Copyright NPR.