The fiscal cliff negotiations are a three act drama. We are in Act II, where Obama and Boehner gather up all the political clout they can muster before actually negotiating with each other, which, with 33 days till the cliff, they are not doing. Each is waiting for the other to get scared into talks by the prospect of tax rates going up on all Americans when the fiscal cliff hits along with New Year’s fireworks.
Act I was the election. If Mitt Romney was president, we’d be looking at faster negotiations, nobody’s tax rates going up, and the fiscal cliff avoided, at least on paper, by large cuts to social programs, and a revival of the Fired Big Bird twitter feed. Act I ended with Obama’s reelection, gains in both houses for the Democrats, but with Republicans still in control of the House (despite the Democrats receiving more Congressional votes—little something called gerrymandering kept the G.O.P. in power).
Act III of the fiscal cliff opera will be when Obama, Boehner and other party leaders negotiate over tax rates for the top 2% of income earners, limiting tax deductions, and budget cuts to the military and social programs. Why aren’t we there yet? Because both sides think they can score more points in Act II.
Before the actual negotiations, Obama and Boehner are looking anywhere they can for political clout. Obama’s team made a shrewd move by launching the twitter hashtag #my2k, referring to the $2,000 an average American family would get (or technically, not lose) if Congress passes a bill to keep their tax rates at current levels and not let the Bush tax cuts expire. The reason that they haven’t is that the House of Representatives wants to keep the Bush tax cuts for everyone, including on income over $250,000 a year. In addition to pumping up support on social media, Obama is also meeting with executives from Goldman Sachs, Caterpillar and Honeywell, among others. Boehner is meeting with many of the same groups.
Supposedly, at some point, the two will cobble together all the clout and public good will they have earned and see which makes a bigger pile. That’s when Act III starts. The thing is, this play has no director, and while both sides would like a deal to happen before tax rates go up on January 1st—the edge of the fiscal cliff—the thing they would like second most is for the other side to get blamed if things don’t work out.