December 6, 2012
Fiscal Cliff Countdown: 26 Days
Negotiations continue between the Obama administration and congressional leaders on deficit reduction legislation that would need to be approved by Congress before the end of the year to avoid the sequester and tax increases. Last week the President released his proposal, which took a hard line on both taxes and entitlement spending, with increased tax revenues accounting for the greatest share of deficit reduction. Not surprisingly, that proposal was quickly criticized by republicans who then issued a counteroffer that was much more focused on entitlement cuts, although with substantial tax revenues included as well.
For their part, congressional democrats appear increasingly unwilling to major cuts to entitlements, which have been a big driver of spending over the past few decades. The state of affairs has led to predict that the nation may well go over the cliff and leave the difficult task of cleaning up the mess when the new session of Congress convenes in January.
Meanwhile, appropriators are working toward an omnibus FY 2013 spending bill that could emerge for a vote next week. The bill would complete the appropriations cycle for the full fiscal year if agreement can be reached. The government is operating through March 2013 under a continuing resolution that sets total discretionary spending in accord with the $1.047 trillion limit agreed to in the Budget Control Act. The omnibus may adopt this spending level for the full year, although House Republicans have sought to reduce that level by $19 billion.