The instinct is to call for a punt.
Ergo, pass an 11th hour stopgap measure to keep everything the same until March when the newly elected Congress can take it up. Besides, that's when the debt ceiling comes up anyway.
But thinking about it further that would favor the Democrats. In March they will have more members in both the House and Senate and a frustrated electorate sick to death of congressional inaction. That may also bring in the possibility of another credit rating hit.
Thing is, the hard-line Hannity Repubs do not show any signs of bending. They may not want the punt. Which means we go off the cliff because there's no way Obama will cave completely. Yes, they would blame Boehner, the Tea Party, Grover Norquist, Wayne LaPierre and even Bush, but Obama would get some blame as well for jetting off to Hawaii instead of 'getting it done'. He doesn't want any blame.
Besides, going off the cliff would be insane for America's accountants and tax professionals while shaking the markets and causing a paycheck shock across the American landscape. People would be forced to revisit the 90s (say what, those were the rates under Clinton?). Such a shock wouldn't really help the Hill-Bill legacy since the GOP would not fail to remind everyone the Bush tax cuts weren't really just for the rich.
So how about an 11th hour bill raising taxes on those making over 750,000, made possible by crossover Democrats and some moderate Republicans (and perhaps costing Boehner his Speakership) but getting it done with a one year debt limit increase and some concurrent real spending cuts?
Hey, it's just a WAG--I really have no clue what will happen and haven't stayed at a Holiday Inn Express in years.
SOMEONE WHO KNOWS.. 12/22/12
Newt says...do not fear the cliff.
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