Fiscal Cliff Talks Resume As Deadline Ticks Closer

Negotiations to avert the fiscal cliff remained low-key in the first day of congressional work following the Thanksgiving holiday. Tamara Keith talks to Melissa Block.





And I'm Melissa Block.

With the Thanksgiving holiday over, Congress is getting back to its lame duck session. Issue number one is how to avert the fiscal cliff. That's the half-trillion-dollar combination of tax increases and spending cuts scheduled to take effect in January. And as the Senate resume business today, Republican Leader Mitch McConnell said Republicans and Democrats are still at an impasse.

SENATOR MITCH MCCONNELL: So we'll continue to wait on the president and hope that he has what it takes to bring people together and forge a compromise. If he does, we'll get there, and if he doesn't, we won't. It's that simple.

BLOCK: Joining us now from the Capitol is NPR's Tamara Keith to update us on the latest. And, Tamara, it's just over a week ago that you had Democratic and Republican leaders going to the White House and coming out, including Mitch McConnell, saying, we had a very constructive meeting. Now he's saying, we're at an impasse. Is there any sign of movement?

TAMARA KEITH, BYLINE: You know, discussions are continuing at a staff level, but there are currently no face-to-face meetings scheduled between the leaders and the president, though, over the weekend, the president did call Speaker John Boehner and Senate Majority Leader Harry Reid. But we don't know what came out of that conversation. Clearly, no deal came out of that conversation.

You know, I'd say, at this moment, we're in that throat-clearing phase, and no one knows how long it will last. You know, the Majority - the Minority Leader Mitch McConnell today reasserted this thing that many Republicans have been saying recently, which is that they are prepared to move out of their comfort zone and talk about raising revenues to resolve this impasse.

Then I call a high-level Democrat, and he says, yeah, sure, great, but what do they mean by revenues? Because we've been dancing around this revenue issue for more than a year, and it seems that Republicans and Democrats, as far as we can tell, still have very different definitions of what revenues are.

BLOCK: In other words, would it mean raising tax rates or merely capping deductions?

KEITH: Or any number of other variables that might allow them to raise taxes on the wealthy without actually raising their marginal tax rates or not or - yes. Basically, there's a lot of dancing around what it even means.

BLOCK: Yeah. Well, five weeks to go before the deadline, remind folks, Tamara, on what happens exactly if Congress fails to act.

KEITH: Well, so there are two major elements of the so-called fiscal cliff and lots of minor elements that add up to a lot of money, too. But the two big things are the end, the expiration of the Bush-era tax cuts, which happen at the end of this year, and virtually every taxpayer would be affected. It works out to about a $3,500 increase, tax increase per household.

And then, at the same time, the other element is what's called the sequester, and those are major budget cuts. It would work out to about an across-the-board cut in defense spending of 10 percent and 8 percent in non-defense discretionary spending.

And you might say, OK, great, let's cut. We need to fix the deficit. But these cuts are considered draconian. They're across the board. They're indiscriminate. They're not strategic, and really they were there to force Congress to act and come up with a deal a year ago. Well, they failed. Now we're on the edge of the cliff.

BLOCK: On the edge of the cliff. And there are some voices, Tamara, saying, look, going over that fiscal cliff might not be such a bad thing. Explain that.

KEITH: Yeah. So many people - the president, GOP leaders, many Democratic leaders - say it would be a bad thing. It would send markets into turmoil. But there are some Democrats, some high-level Democrats who say, hey, if we go over the fiscal cliff, the Bush-era tax cuts expire and then Democrats have all the leverage.

And, you know, they're being called the Thelma and Louise crowd, basically saying, let's go over the cliff, and then, you know, come January 3, they could go through and start cutting people's taxes: cut taxes on the middle class, cut taxes wherever you want and - though not cut taxes for the highest income earners, those that the president promised to allow their taxes to go up.

But Grover Norquist and his anti-tax group is - has a very strong sway here with Republicans, and that's why Democrats are saying, hey, maybe we could get around Grover by doing it this way.

BLOCK: Although, and briefly, Tam, there are a number of Republicans who are now are distancing themselves from that anti-tax pledge that they signed.

KEITH: Yeah. And really, the deal with this pledge is it's only as powerful as its sway over the members who have signed it. And there's a real question now, are more people going to come out and say, hey, maybe we won't be held to the pledge or is Grover Norquist going to continue to wield the power that he's wielded for so many years?

BLOCK: OK. NPR's Tamara Keith at the Capitol. Tamara, thanks.

KEITH: Thank you.




