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Fiscal Cliff To Be Decided by a Few Key Players


(AP Photo)

The campaigning marathon may be over, but there’s a legislative sprint ahead.

There is no goal more urgent between now and the end of the year than mitigating the impact of the expiring tax cuts and impending spending cuts known collectively as the “fiscal cliff.” Virtually no one wants to see the fiscal restraint and associated risk of recession come to pass, but preventing it requires serious negotiating.


Whether lawmakers achieve the so-far-elusive grand bargain, just delay the fiscal belt-tightening, or fail to reach a compromise altogether, the power to keep the economy from going over the cliff will be concentrated in the hands of a precious few. With the policy options mostly on the table and both sides having made clear what their dealbreakers are, the next two months of negotiations will be all about finding a palatable compromise, Congress-watchers say.

“I don’t think there’s too much magic,” said Douglas Holtz-Eakin, president of the conservative American Action Forum and a director of the Congressional Budget Office under President George W. Bush. “At this point, we know the contours of the disagreement.”

As such, leaders in both parties will be the ones to watch as talks progress. Here are a few of the key lame-duck players:



Going into negotiations, the White House has made one thing clear: Obama will veto any bill that includes an extension of the expiring upper-income tax cuts. To strike a deal, he will no doubt lean heavily on a team of advisers, including Chief of Staff Jacob Lew and National Economic Council Director Gene Sperling, both of whom are policy wonks with years of budget-battle experience.



With decades of experience in the Senate and negotiating with other lawmakers, Biden will likely take on a role similar to the one he played in the 2011 deficit talks, in which he convened a group of bipartisan lawmakers to hash out a deficit-reduction deal. White House aides nicknamed him the “McConnell whisperer,” referring to top Senate Republican Mitch McConnell, according to Bob Woodward’s account of the deficit talks. And House Majority Leader Eric Cantor, R-Va., said at the time that he was “very impressed” with Biden’s leadership and at one point attributed the success of the meetings to him. “My impression is that during his face-to-face meetings with Cantor, [Biden] was able to depersonalize the differences enough to establish a decent working relationship,” said the Brookings Institution’s William Galston, a former policy adviser to President Clinton.


Lew, a 30-year veteran of budget battles under Presidents Reagan and Clinton, will be key to the upcoming negotiations and he’s determined to handle things differently than during the debt-ceiling standoff. In a recent profile, National Journal’s Nancy Cook reported that “this time, there will be no chats on the Truman Balcony or glasses of Merlot for John Boehner, as took place in 2011 when the GOP House speaker and Obama tried to strike a grand bargain on the budget. Instead, the administration plans to play hardball in the six weeks after the election.” The administration plans to focus first on getting House and Senate Democrats in line before dealing with the Right. With his legacy on the line, Lew is sure to be deeply involved.


Geithner is crucial to one of the many pressing fiscal issues that needs to be resolved: the nation’s debt limit. Treasury expects the country to reach its legal borrowing limit sometime before year’s end and so-called extraordinary measures will only be able to delay default until sometime around February, according to some outside estimates. Geithner will no doubt advise Obama on the issue, but he could also play a role by ensuring that the debt limit remains a part of the conversation and, thus, a motivator to action. “Geithner’s role is going to be to ride shotgun on the debt limit and make sure that everybody is sufficiently alarmed about that,” said Robert Bixby, the director of the Concord Coalition, a nonpartisan advocate for responsible fiscal policy. “And that would help bring a negotiation to a conclusion.”


The Senate majority leader, one of Washington’s most experienced negotiators, has spent the last few months setting expectations for the lame duck and exploring options on how to proceed. He has repeatedly stated that he expects a deal before the end of the year, saying in early September that he was "disappointed [that] my friend John Boehner said that he has no confidence" in reaching a lame-duck compromise. Reid’s office has been in close contact with the White House Office of Management and Budget to discuss a range options in dealing with the fiscal cliff, aides told National Journal. One backup option entertained by Democratic leadership would include a down payment now and delegate responsibility to the relevant congressional committees for cuts to be imposed next year.


Senate Minority Leader McConnell will likely serve as a bridge, thanks to his strong working relationship with Biden, which was crucial in striking the 2010 deal on extending income-tax cuts passed under President George W. Bush. The New York Times reported at the time that “the depth of the personal negotiations between Mr. Biden and Mr. McConnell was remarkable.” Still, something has to give on taxes. McConnell and his House counterpart, Speaker John Boehner, have made clear that they stand in direct opposition to the administration on the Bush cuts—they both support an extension of the cuts for all income levels. And McConnell’s upcoming election could pull him to the right. McConnell showed in September that he takes a potential tea party threat in his home state of Kentucky seriously when he hired a key tea party campaign manager.


As chairman of the Senate Finance Committee, Baucus is one of the most influential members of Congress. Having been the top Democrat on the committee since 2001, he has an intimate familiarity with the issues up for debate. He reached across the aisle that year to pass one of President George W. Bush’s key domestic priorities—a $1.3 trillion tax-cut package—and was selected by Obama to sit on the Simpson-Bowles fiscal commission. But Baucus also has a history as a centrist who can frustrate party leaders. He reportedly upset then-Senate Majority Leader Tom Daschle for failing to run the final draft of the tax bill by the Democratic Caucus. Baucus also voted against the Simpson-Bowles recommendations, saying they painted “a big red target on rural America.” He is up for reelection in 2014 in Montana, where fellow Democrat Jon Tester just narrowly secured his own reelection.


A close adviser to Reid, Schumer is one of the Senate’s most influential Democrats. As National Journal’s Almanac of American Politics puts it, “Seldom if ever has the No. 3 person in a party’s leadership done as much to determine a major party’s policy stands and political positioning in the Senate." And expect Schumer’s role in the fiscal negotiations to be no different. In October, he delivered a key speech, crystallizing the Democratic negotiation position. Boehner delivered the first major postelection fiscal-cliff speech for Republicans. And Schumer did the same for Democrats, praising Boehner’s “good first step,” while criticizing the GOP’s belief that lower taxes can increase revenues as a “Rumpelstiltskin tax fairy tale.” Schumer is likely to continue to be a widely quoted voice in the discussion.


Murray, the head of the Democratic Senatorial Campaign Committee, is riding high after helping the party expand its majority in the Senate despite having far more seats up for grabs than the GOP. Her role in that effort, coupled with her cochairmanship of the deficit-reduction supercommittee last fall, has made her something of a power player in the party. And as the Senate’s fourth-ranking Democrat, she previewed her party’s positioning in the fiscal debate in July, when she made it clear that upper-income tax cuts were a non-starter. Some questioned whether she had upset more-senior leadership in her statements, but White House aides were quick to back her up at the time.


As speaker of the House, Boehner will play a central role in striking a deal. He will have to both represent and corral the more-conservative members of his party—and strike a balance that appeals both to them and the White House. He will also have to succeed where he and Obama failed in the 2011 deficit talks. Despite the conventional wisdom, it’s not new tea party members that will frustrate his efforts at a deal, Boehner said. “The biggest challenge has been a dozen of our more-senior members who, whatever the leaders have wanted, it’s never been good enough,” he told National Journal. “We don’t live in a perfect world, and we can’t let perfect be the enemy of the good.”


With both parties entering negotiations with bold tax stances, Camp, the chairman of the tax-writing Ways and Means Committee, will be a crucial, respected, and knowledgeable member of the negotiations. “He probably knows as much as anybody about his part of the budget,” the Brookings Institution’s Galston said. Camp has a proven track record of being able to work with his Senate Democratic counterpart Max Baucus and is known for his consensus-building style and a bipartisan streak.


Often considered a key standard-bearer of Republican policy, Cantor is likely to play the good cop to Boehner’s bad cop with the Republican base. That’s not to say that the two are working in perfect coordination, however. As National Journal has reported, Boehner has had to constantly "look over his shoulder at his ambitious top lieutenant, Majority Leader Eric Cantor of Virginia, as he gauged whether the best tack was to take a harder line with his own members or find new ways to pacify the dissidents in their ranks." And, in his book, Woodward wrote that Boehner and Obama had joked that Cantor was gunning for the role of House speaker.


As minority leader, Pelosi’s role is self-evident: She will act as a conduit between House Democrats and the White House. But the savvy top House Democrat has a liberal wing to represent. When congressional leaders and Obama reached a deal during the 2011 debt talks, Pelosi said “we all may not be able to support it, or none us may be able to support it.” As The Washington Post reported at the time, it was a political move on a bill that was destined to pass: “Looking as though she happily and quickly signed off on a deal that will leave many House liberals deeply unhappy would badly undermine Pelosi’s appeal to her base. And she’s smart enough not to do that.” Woodward also quotes Obama telling aides that he was disappointed that she and Reid failed to deliver “the one thing that I said I actually needed” during the initial debt talks: a deal that stretched beyond the election.


Van Hollen, the top Democrat on the House Budget Committee, has already made some waves on some of the issues involved. Last month, he prominently said an extension of the expiring payroll-tax cut is worth considering. "I don't think anyone thinks we should permanently extend the payroll-tax cut, but given the situation we're in I don't think that should be taken off the table," he said. His comment suggested that an issue considered settled a month earlier may, in fact, still be in play.



All Images: AP

This article appears in the November 13, 2012 edition of NJ Daily.

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