Fiscal Cliff

Maybe you were hoping you'd never hear the phrase "fiscal cliff" again after Congress passed legislation Jan. 1 to address that tax-break-expiration deadline.


Three more cliff-type deadlines are fast approaching. They involve: 1) raising the federal debt ceiling 2) modifying automatic, across-the-board spending cuts and 3) funding the government to avert a shutdown.

The deadlines all hit between Valentine's Day and Easter, which means new rounds of chaotic congressional negotiations may start up just after the Jan. 21 presidential inauguration parade ends.

Businesses complained that the uncertainty surrounding the "fiscal cliff" froze their decisions about hiring and expanding, which hurt the economy. Washington has now managed half a deal, which settles tax issues, at least for the time being. But has that removed enough uncertainty to boost some business hiring and investment?

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Jan 4, 2013
Kansas City Chiefs photo

Liberty Memorial got a new designation for the nation’s World War I centennial. And a new era began for the Kansas City Chiefs. Those and other top stories of the week on the Saturday News Review.

The bill that prevented the nation from plunging over the fiscal cliff did more than just stop income tax increases and delay across-the-board spending cuts. It also included several provisions that tweaked Medicare and brought bigger changes to other health care programs.

By letting the House take up the Senate's fiscal cliff-dodging legislation that raises income tax rates on the wealthiest earners, Speaker John Boehner answered affirmatively a question that had been on many minds: Would he allow an up-or-down floor vote on a bill opposed by most fellow House Republicans?

Until the New Year's Day vote, Boehner had generally operated the House under what was known as the Hastert Rule. Named for former Speaker Dennis Hastert, it required a "majority of the majority" to support legislation before the speaker approved a floor vote.

Though more big battles lie ahead in Washington, Wall Street is following the lead of financial markets around the world in giving a thumbs-up to the deal that kept the federal government from going completely over the so-called fiscal cliff.

We're sorry to start the first work day of 2013 on a negative note, but here goes:

Though the House voted 257-167 late Tuesday to OK legislation that kept the federal government from going over the so-called fiscal cliff — and stopped income taxes from rising for about 99 percent of Americans — lawmakers didn't reach agreement on other very divisive issues.

ZTW1 / flickr

The Kansas City region has been recovering from the recession at a slightly faster clip than many other places across the country.

Dan Verbeck / KCUR

Missouri Senator Claire McCaskill, a Democrat, says that falling over the so-called fiscal cliff, the deep program cuts, and big tax increases set to hit January 1st wouldn’t be as dramatic as some people imagine.

Update at 9:45 p.m. Deal Reached

Vice President Joe Biden was meeting late Monday with Senate Democrats to brief them on a proposed deal to stop sharp tax increases and spending cuts. A source told NPR the deal with congressional Democratic and Republican leaders includes a mix of both.

(Scroll down for updates.)

Well, here we are. It's New Year's Eve and with just hours to go before the end of the year and the arrival of the so-called fiscal cliff, Democrats and Republicans in Washington are still trying to strike a deal that heads off automatic increases in taxes, automatic deep spending cuts in a variety of programs and the automatic expiration of some jobless benefits.

Senate negotiators failed to reach a deal Sunday on averting the "fiscal cliff," with the chamber adjourning for the night and only one day remaining before a package of spending cuts and tax increases automatically kicks in.

Majority Leader Harry Reid said the Senate will go back in session at 11 a.m. ET Monday. It's at least theoretically possible that negotiators might reach a deal and the Senate will have a package to vote on when it reconvenes Monday, meaning the measure could go to the House — where it may or may not come to the floor for a vote.

President Obama went on the air to levy pressure on Congress Sunday as Senate leaders worked to negotiate a deal to avert the tax hikes and spending cuts known as the "fiscal cliff."

"I was modestly optimistic yesterday, but we don't yet see an agreement," Obama said in an interview with NBC's Meet the Press taped on Saturday. "Now the pressure's on Congress to produce."

Yes, President Obama and congressional leaders are scheduled to meet at 3 p.m. ET to discuss how to avoid going over the so-called fiscal cliff of automatic tax increases and spending cuts.

But, no, that isn't inspiring much talk this morning of a breakthrough before the midnight New Year's Eve deadline:

A wind energy tax credit is set to expire at the end of this year, but Kansas Governor Sam Brownback is still holding out hope that lawmakers in Washington will extend the credit.

President Obama is "cutting short" a vacation that he'd already said he would cut short. "See you next week," he told reporters last week before leaving for Hawaii. The president is now due back at the White House on Thursday, which is pretty much what was expected. His family will stay in Hawaii until after the New Year.

Senators are also coming back to Washington, but many aren't likely to get to the Capitol until Thursday evening.

The U.S. House of Representatives is likely to vote Thursday on a proposal advanced by Speaker John Boehner to avoid the "fiscal cliff."

Julie Denesha / KCUR

As the President and Republican Congressional leaders continue to butt heads in Washington, the “fiscal cliff” and its 10 percent across-the-board spending cuts loom.

It's not the cutting, it's the uncertainty.

That's the lament these days from governors and mayors awaiting the outcome of federal budget negotiations.

They know they're likely to take a hit; they just don't know how bad it's going to be.

"How do you budget for the unknown?" wonders Ed Long, the county executive in Fairfax County, Va. "Our worst fear is that by [the federal government] not acting, the economy is going to get worse going forward."

Dan Verbeck / KCUR

U.S. Senator Roy Blunt says badly administered mental health programs should be fixed as a remedy, rather than blame guns, for violence like the Connecticut school killings.

If President Obama and House Speaker John Boehner's closed-door meetings aimed at solving the fiscal cliff crisis trouble anyone, you'd expect it to be the open-government watchdogs who routinely bark their outrage at public officials who work overtime to avoid public scrutiny.

KU Lobbies To Save Research Grants

Dec 17, 2012
Dan Verbeck / KCUR

Amid negotiations in Washington to year end avoid budget cuts and tax hikes, universities are lobbying against grant reductions.

President Obama hosted House Speaker John Boehner today, spending nearly an hour together in which they reportedly discussed ways to avert the looming "fiscal cliff" of spending cuts and tax hikes that are due to strike at the end of 2012. Boehner left the White House at 6 p.m., ET, apparently without reaching a deal. As Politico reports, the Republican plans to return to his home state of Ohio this weekend.

As the end-of-year tax increases and spending cuts known as the "fiscal cliff" near, "Democrats are in a strong position with the public," the Pew Research Center reports.

A new national poll Pew released this morning shows that:

Of the 535 members of Congress, not many appear to be in the loop about the "fiscal cliff" negotiations. That makes the rest nervous about having to vote on a bill on short notice despite misgivings about what's in it. But this is often how major deals get accomplished in Washington.

In these budget negotiations, the names Boehner and Obama come up most often — and virtually all the rest are on the outside looking in.

Among the loose ends that lawmakers would like to tie up before the end of this lame-duck session is the farm bill, which is made up mostly of crop subsidies and food stamps.

The last farm bill expired in September. The Senate has passed a new one; the House has not. Farm-state lawmakers are urging leaders to include a farm bill as part of any budget deal to avert year-end tax increases and spending cuts.

But not everyone thinks that's a good idea.

The back and forth over the "fiscal cliff" continues: House Speaker John Boehner sent a new counterproposal to the White House on Tuesday that, according to a spokesman for the speaker, aims to "achieve tax and entitlement reform to solve our looming debt crisis and create more American jobs."

Tuesday's offer from Boehner follows his remarks on the House floor in which he called on President Obama to identify what spending cuts the White House will accept as part of a "balanced approach" toward a deal.

Pew Center on the States

The Washington-based group Federal Funds Information for States reports defense spending cuts could total more than $1 Billion in Missouri if automatic budget cuts are not averted.  Other programs in the state would be hit, too.

As we've said now several times, "the White House and congressional leaders continue to talk about taxes, spending cuts and how to avoid the so-called fiscal cliff that arrives at midnight Dec. 31 — when Bush-era tax cuts are set to expire and automatic spending cuts are set to go into effect."

As NPR and others cover the story, we're pointing to interesting reports and analyses. Here are some of the latest.

KU / flickr

Budget negotiations between President Obama and Congressional leaders continue, but if those talks fail, Kansas will see a series of funding cuts that will affect the future of higher education, research, and military bases in the state.