Fiscal cliff blame game as solution unclear

Last updated 10:05 24/12/2012

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Senators bickered Sunday over who's to blame for lurching the United States toward a year-end "fiscal cliff," bemoaning the lack of a deal days before the deadline but bridging no differences in the debate.

With the collapse Thursday of House Speaker John Boehner's plan to allow tax rates to rise on million-dollar-plus incomes, Senator Joe Lieberman said "it's the first time that I feel it's more likely we'll go over the cliff than not," meaning that higher taxes for most Americans and painful federal agency budget cuts would be in line to go ahead.

"If we allow that to happen it will be the most colossal consequential act of congressional irresponsibility in a long time, maybe ever in American history because of the impact it'll have on almost every American," said Lieberman, a Connecticut independent.

If President Barack Obama and Congress can't reach a deal by December 31, the so-called "fiscal cliff" looms.

Some US$536 billion (NZ$651b) in tax increases, touching nearly all Americans would begin to take effect in January, because various federal tax cuts and breaks expire at year's end. Also, about US$110b in spending cuts divided equally between the military and most other federal departments would be automatically triggered.

The fear is that the combination of tax increases and spending cuts would push the fragile US economy back into recession.

Wyoming Senator Jon Barrasso, a member of the Republican leadership, predicted that the new year would come without an agreement, and he faulted the White House.

"I believe the president is eager to go over the cliff for political purposes. He senses a victory at the bottom of the cliff," he said.

Democratic Senator Kent Conrad of North Dakota, chairman of the Senate Budget Committee, was incredulous at Barrasso's assertion that 'there is only one person that can provide the leadership" on such a matter vital to the nation's interests.

"There are 535 of us that can provide leadership. There are 435 in the House, 100 in the Senate and there is the president, all of us have a responsibility here," he said. "And, you know what is happening? What is happening is the same old tired blame game. He said/she said. I think the American people are tired of it. What they want to hear is what is the solution?"

No solution seemed any nearer, with Obama and Congress on a short holiday break. Congress is expected to be back at work Thursday and Obama in the White House after a few days in Hawaii.

"It is time to get back to the table," said Democratic Senator Amy Klobuchar of MInnesota. "And I hope if anyone sees these representatives from the House in line shopping or getting their Christmas turkey, they wish them a merry Christmas, they're civil, and then say go back to the table, not your own table, the table in Washington."

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Predicted Lieberman: "We're going to spend New Year's Eve here I believe."

Obama already has scaled back his ambitions for a sweeping budget bargain. Before leaving the capital on Friday, he called for a limited measure that extends George W. Bush-era tax cuts for most people and staves off federal spending cuts. The president also urged Congress to extend jobless benefits for the long-term unemployed that would otherwise be cut off for 2 million people at the end of the year.

"The truth of the matter is, if we do fall off the cliff after the president is inaugurated, he'll come back, propose just what he proposed ... in leaving Washington and we'll end up adopting it, but why should we put the markets in such turmoil and the people misunderstanding or lack of confidence," said Senator Johnny Isakson, a Georgia Republican. "Why not go ahead and act now?

Obama's announcement late Friday suggested that a smaller deal may rest in the Senate, given the failure of Boehner's option in the House of Representatives.

"The ball is now clearly with the Senate," said Lieberman.

He said Senate Majority Leader Harry Reid and Republican leader Mitch McConnell of Kentucky "have the ability to put this together again and pass something. It won't be a big, grand bargain to take care of the total debt, but they can do some things that will avoid the worst consequences going over the fiscal cliff."

Texas Republican Senator Kay Bailey Hutchison said she expects "it is going to be a patch because in four days we can't solve everything."

It was only a week ago when news emerged that Obama and Boehner had significantly narrowed their differences. Both were offering a cut in taxes for most Americans, an increase for a relative few wealthy Americans and cuts of roughly US$1 trillion in spending over a year. Also included was a scaling back of future cost-of-living increases for Social Security recipients - a concession on the president's part as much as agreeing to higher tax rates was for Boehner.

Lieberman was on CNN's "State of the Union," while Barrasso and Conrad appeared on "Fox News Sunday." Klobuchar and Isakson were on "Fox News Sunday," while Hutchison was on CBS' "Face the Nation."

- AP

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