The nation can only hope at this point that the “fiscal cliff” turns out to be as anticlimactic as the one concerning the end of the Mayan calendar. But so far it doesn't look promising.
As Congress goes back in session today for the stretch run of 2012 — and President Barack Obama returns to Washington, having cut short his family Christmas vacation in Hawaii — the countdown in days remaining to reach a compromise has reached five. Making the situation more difficult, this last push toward preventing automatic year-end tax hikes and massive spending cuts from taking effect begins on a down note.
Having failed to iron out a compromise in talks with the White House, House Speaker John Boehner last week attempted to push through a back-up plan that would have reduced the size of the tax cut package. But his plan collapsed before the holiday break thanks primarily to opposition from fellow House Republicans who were against raising taxes on those making more than $1 million a year.
Obama, who had sought higher taxes on those making more than $250,000 a year, proposed last week to keep tax rates as they are for anyone making less than $400,000. That still leaves a sizable gap to bridge.
Thus, the battle line now shifts to the U.S. Senate where the pressure is on Majority Leader Harry Reid, D-Nevada, as well as the top Senate Republican, Mitch McConnell, R-Kentucky, to get something done.
Obama and Boehner have both called on the Senate to come up with a compromise. But even if a deal emerges, there's no guarantee that it won't be the target of a filibuster in the Senate.
Nevertheless, lawmakers need to find common ground here. If no deal is reached by the end of the year, just about all Americans will see their income taxes increase. More than 2 million people will lose their jobless benefits.
In addition, fewer jobs will be available as the $110 billion in federal spending cuts will force many federal agencies to scale back while discouraging private companies from staffing up.
Stocks also are likely to take a plunge, erasing recent gains Americans have seen in their 401(k) retirement accounts. All of this could push the nation back into recession mode.
It's difficult to tell at this point whether Democrats and Republicans in Washington are actually working to avert a financial crisis or are positioning themselves for cover in the false hope that one side can emerge from failure blameless.
Even the Mayans recognized that some things have to come to an end. Congress needs to end this brinkmanship and put Americans and global financial markets at ease by reaching agreement somewhere on this side of the cliff.