Fear of the ‘Fiscal Cliff’ Inspires More Grand Bargain Talk

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It can be a little hard to follow the teachings of Washington’s centrist cognoscenti. In arguing that a grand fiscal bargain is feasible even in this heated election year, the New York Times today talked to middle-way thinktankers and Gang-of Senators (your Warners, Grassleys and Wydens)–in other words, the types who always think the Simpson-Bowles deficit proposal is one Super Serious Brookings lecture series away from universal approval–and found them characteristically optimistic. “…Beneath the campaign noise, some elected officials and policy experts see improving odds for 2012 to end up yielding much more, including progress toward a deal on tax and budget issues that have confounded Washington’s divided government,” John Harwood writes. “Some say the campaign dialogue could even bring a deal closer.”

Meanwhile, former Senator Judd Gregg, who might have been called upon for such sunny predictions in years past, took to the pages of The Hill to do his duty as an ex-office holder turned pundit: despair at the politicized politics of a political election year. Everyone should just leave Washington and go home, he writes: “President Obama could go back to Chicago and campaign from there, reconnecting with his old friend and former chief of staff, Mayor Rahm Emmanuel. Members of Congress could go back to their districts or wherever else it is they live, since everyone knows that nothing is going to happen.”

So whom should we believe? Will it be nothing or grand bargain? Harwood has the right of it when he quotes Peter Orszag saying that the expiration of Bush tax rates and automatic defense cuts, both of which are scheduled to kick in Jan. 1, will force some kind of action. Nothing, in this instance, isn’t actually an option. These scheduled events–known as the “fiscal cliff” in the financial community or “current law” among the budget wonks–are not something either party wants to see come to pass. But impending consequence is hardly a foolproof incentive for Congress to act big. The humiliating debt ceiling talks of 2011 failed to produce more than a mutually dissatisfying package that addressed the potential for immediate economic disaster while nibbling at the edges of the so-called grand fiscal pursuit, delaying everything else until…January 1, 2013, in the case of the defense cuts. Along with bipartisan bromides and a-plague-on-both-houses centrism, that’s the kind of not-so-grand Washington is most likely to produce.

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