* For U.S. Congress, big deals wait for Christmas
* "Smell of jet fumes" sometimes the most powerful force
By Richard Cowan
WASHINGTON, Dec 3 Watching the events of the
past few weeks, you could have gotten the idea that the United
States is not only going to slip from the "fiscal cliff" but
jump lemming-like off it.
President Barack Obama presented last week a proposal that
upset Republicans with its $1.6 trillion in revenue increases
and limited spending cuts and then goaded them while on the road
at a toy factory with jokes meant to paint the Republicans as
His main Republican sparring partner, Speaker of the U.S
House of Representatives John Boehner, then declared in a series
of public appearances that the two sides are "nowhere."
And yet, seasoned Washington hands say that once this rather
gloomy back and forth has played out - and it might take another
week or more - the work towards reaching a solution that both
sides can sell to their parties and their lawmakers will begin
A deal by Christmas, a week before the fiscal cliff
deadline, remains uncertain but not out of the question. The
so-called fiscal cliff is a combination of U.S. government
spending cuts and tax increases due to be implemented under
existing law in early 2013 that may cut the federal budget
deficit but also tip the economy back into recession.
The pattern of little happening until very close to a
holiday is well-established on Capitol Hill. The past three
pre-Christmas seasons brought important eleventh-hour
developments on health care in 2009, tax cut extensions in 2010
and the payroll tax holiday in 2011.
It's so ingrained that many Capitol Hill veterans
routinely, and sometimes mistakenly, dismiss as theater
pronouncements of progress or stalemate that occur more than a
few weeks before the holiday.
"The Congress doesn't work on the clock; it works on the
calendar," said Republican Senator Roy Blunt of Missouri, who in
15 years of serving in Congress, including leadership jobs, has
been through plenty of tough scrapes.
"There is just that required moment when something has to
happen because you've run out of time," said Blunt. In the
meantime, "there is a desire to maximize your negotiating
position until you realize you don't have any room any more to
negotiate. It almost invariably works that way."
With each day that goes by, as the Washington cliche goes,
the "smell of the jet fumes" - meaning the airplanes that will
carry members of Congress back to their home states for
vacations or to foreign destinations on taxpayer dollars - gets
stronger and stronger.
With December's onset bringing Christmas sharply into focus,
the pace of fiscal cliff negotiations between Democrats and
Republicans will pick up starting this week, according to
lawmakers and their aides.
Technically, there is a Dec. 31 deadline for Obama and
Congress to find a way to avoid hundreds of billions of dollars
in tax increases and spending cuts that experts say would give
Americans a hangover far worse than what any drunken New Year's
Eve celebration could deliver.
But for the 535 members of the U.S. House of Representatives
and Senate, who need deadlines to force them to accomplish
anything big, it is the threat of having to work through
Christmas that is fueling the oncoming mad dash to a deal - or
at least a deal to eventually get a deal.
While no formal negotiating sessions are on the schedule
between Republicans and Democrats, expect the pace of work by
staff members to pick up, along with the back-and-forth
exchanges on television and in op-ed pages of the sort that got
going last week.
Obama could move the ball - or not - on Monday, when he has
an unrelated public appearance, or Tuesday, when he speaks to
the National Governors Association, or Wednesday, at a meeting
with the Business Roundtable, the Washington lobbying arm for
CEOs. Boehner will surely respond to anything he says.
Democrats in the House of Representatives have threatened to
force a vote on the tax increases if Republicans don't schedule
one by Tuesday. Republicans, who control the House and the
timing of votes in it, have no intention of bringing a bill to
the floor this week.
That could produce some heat.
But do not expect breakthrough concessions. It's too soon.
"I think we're in the initial stages," Democratic Senator
Max Baucus said Friday in a CNN interview. "There are about 30
days left before the so-called cliff hits us. I think, in about
a week, we will get down to serious negotiations.
That was illustrated in a round of Sunday news show
appearances by Treasury Secretary Timothy Geithner, President
Barack Obama's chief negotiator, and Boehner in which nothing
new was uttered.
Geithner stuck to his demand that income taxes rise
immediately on families with net incomes above $250,000 a year.
Boehner stuck to his insistence that the administration
present what he called a "serious" plan for deficit reduction
before Republicans get serious on the subject of revenue.
ERODING THE CLIFF
Blunt's Republican colleague, Pennsylvania Senator Pat Toomey
who pushed his own deficit-cutting plan that Democrats pounded
last year when Congress was up against another deadline, worries
about the last-minute deal-making.
"It's not a good idea at all because the real problem is a
spending problem. To address that, it's hard to do at a moment's
notice. It requires some thoughtful legislation to get the kind
of reforms that generate the savings we need," Toomey said in a
Market analysts don't think much of Washington's rhythms
either, particularly when it involves a single potentially
calamitous event - like going off a fiscal cliff.
"The concerns on the fiscal cliff - as valid as they might
be - could be overblown. When you look at a lot of the
overriding sentiment, that has gotten extremely negative," said
Ryan Detrick, senior technical strategist at Schaeffer's
Investment Research in Cincinnati.
(Additional reporting by Thomas Ferraro and David Lawder;
Editing by Fred Barbash, Martin Howell and Cynthia Osterman)