The Two-Way
5:30 am
Fri December 21, 2012

Everybody Over The Cliff?

Originally published on Fri December 21, 2012 6:25 am

House Speaker John Boehner's "major defeat" Thursday night — when he had to pull his "Plan B" to extend Bush-era tax cuts for nearly all American taxpayers because he couldn't get enough support from his fellow Republicans — means negotiations about avoiding the so-called fiscal cliff remain at an impasse.

So now what?

As NPR's Mara Liasson said before Thursday night's surprising news from the House, there already had been talk about going "over the cliff a little bit" — for a few days or so after Jan. 1 — before an ultimate compromise.

Well, that talk continues. CBS News writes that:

"The only way to reach a deal may be to let the nation go over the 'cliff.' When that happens, the expiration of the Bush-era tax cuts will mean that taxes on nearly all Americans will go up. That fact would seem to make it easier for House Republicans to back a 'fiscal cliff' deal, since they would be voting for a tax cut, not a tax hike."

CBS adds, though, that:

"Going over the 'cliff' could have significant consequences. To be clear, the 'cliff' is actually more of a slope: The $1.2 trillion in automatic spending cuts are phased in over a decade - it's not the immediate punch to the cut that 'cliff' implies - and there are budgetary maneuvers that can at least somewhat soften the blow of both the tax hikes and spending cuts. But going over the 'cliff' could spook the markets and once again shake world perceptions of the ability of the U.S. government to function effectively. And if a deal is not reached relatively soon after the deadlilne, the $500 billion in tax hikes and $200 billion in spending cuts in the first year will likely start pushing the nation back into recession."

On that point about spooking the markets, Bloomberg News offers this headline:

"U.S. Stock Futures Drop as House Republicans Cancel Vote."

Update at 9 a.m. ET: Boehner plans to hold a news conference at 10 a.m .ET.

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