Reid offers little hope of averting ‘fiscal cliff’

By Karoun Demirjian

Thursday, Dec. 27, 2012 | 11:03 a.m.

Sen. Harry Reid said this morning that it appears the country is about to go over the fiscal cliff.

Reid took to the Senate floor, making a speech that echoed the point he’s been making for weeks: the House of Representatives should pass a Senate bill adopted in July to extend existing tax rates to income levels up to $250,000.

House members have decried that bill and most other attempts to partially extend the Bush-era tax cuts.

Tax increases and spending cuts that will automatically take effect Jan. 1 unless lawmakers come to an agreement are the economic double-punch that have become to be known as the “fiscal cliff.”

Last week, House Speaker John Boehner failed to get House Republicans to swallow a modified tax rate extension that would have let rates on income levels more than $1 million rise. He has resisted pressure to bring up the $250,000-level bill, which Reid is adamant could pass with the backing of Democrats and a few compromise-minded Republicans.

The House “is being operated with a dictatorship of the speaker,” Reid said. “Take the escape hatch we’ve left you. Put the economic fate of the nation ahead of your own fate as the speaker of the House.”

Reid said Boehner is delaying a vote on the politically charged issue because in another week he faces a vote to retain his House leadership.

“John Boehner seems to care more about his speakership than keeping the nation on firm financial footing,” Reid said.

Boehner last week put the ball back in the court of President Barack Obama and Reid to come up with a compromise he can put before the House.

But Reid said that’s impossible.

“Democrats can’t put together a plan of our own because without the participation of Speaker Boehner and [Senate Republican] Leader [Mitch] McConnell nothing can happen,” Reid said. “And so far, radio silent.”

Should the country go over the fiscal cliff, the economy would take a hit and people’s paychecks will shrink, Reid warned.

But it wouldn’t happen immediately.

It will take a few months, economists have argued, for the economy to truly feel the effects of the fiscal cliff. It would take payroll offices a few weeks to adjust pay schedules to reflect new tax withholdings.

That potentially gives Congress wiggle room.

After Jan. 1, when tax rates automatically rise, any vote couldn’t be construed as one to raise taxes but would, by definition, be a vote to lower tax rates. That would alleviate conservative Republicans’ philosophical problem with the bills being discussed.

So even if the country goes over the cliff, there may be time for a correction. The 112th Congress doesn’t go out of session until 11:59 a.m. on Jan. 3.