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Fiscal cliff talks likely to go down to the wire

7:28 AM, Nov 30, 2012   |    comments
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By David Jackson, USA TODAY

Sit back and relax, this is going to take a while.

It's always been doubtful that the White House and Congressional Republicans would reach a quick agreement to head off the end-of-the-year "fiscal cliff" -- and as of Friday it looks even less likely.

The White House on Thursday made an offer to the GOP -- basically the same plan President Obama proposed during the election, one that emphasizes higher taxes on the wealthy as a way to reduce the nation's $16 trillion-plus debt.

Republicans attacked the White House plan -- just as they did during the election -- saying it promotes tax rate hikes but fails to detail meaningful spending cuts.

Fiscal cliff explainer

The fiscal cliff is a series of automatic tax increases and budget cuts that kick in next year if the parties are unable to reach agreement -- and there are many reasons to think the talks will go right down to the Jan. 1 deadline, and perhaps over it.

Government officials may well spend New Year's Eve crunching budget numbers rather than clinking champagne glasses.

Among the reasons:

-- There's no real incentive for the parties to reach an agreement now. Markets may want an early settlement, but, as mentioned, the fiscal doesn't start until Jan. 1 -- more than four weeks way, a near-eternity in politics. Even after New Year's Day, elements of the fiscal cliff phase in gradually, and a new Congress could always pass legislation retroactive to the start of the year.

-- Negotiators will try to add things to the basic debt reduction agreement. Democrats and Republicans have signaled they want additional issues addressed as part of a fiscal cliff agreement; they will take the time to push these issues, and hope the pressure of the deadline will force the other party to agree.

The White House wants Congress to go ahead and raise the debt ceiling now; House Speaker John Boehner, R-Ohio, said he wants to address health care and entitlement reform now.

Expect pushes for last-minute concessions.

-- The biggest reason for a deadline agreement: This is just the way things are done in Washington.

The White House and the Republican House went down to the last minute on the looming government shutdown of 2011, and on the subsequent debt ceiling dispute that same year.

Why wouldn't they go down to the last minute on the fiscal cliff talks of 2012?

USA TODAY

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