The official countdown clock for the fiscal cliff starts on Thursday, and a big question will be if Congress will be in session next Monday night.
President Barack Obama and Senate Democrats are set to resume work on fiscal cliff talks on Thursday, assuming the president’s return from Hawaii isn’t delayed by bad weather.
That leaves the Democrats and Republicans with five days to agree on a fiscal cliff compromise, get the bills written for such measures, and hold two high-profile public votes.
Outgoing Senator Joe Lieberman seemingly joked on Sunday that the fiscal cliff vote could come as gigantic crowds amass on New Year’s Eve to celebrate the holiday.
"We’re going to spend New Year’s Eve here, I believe," he told CNN.
But on further review, maybe Lieberman wasn’t joking after all.
The assumption going into Thursday was that President Barack Obama and Senate majority leader Harry Reid would agree on some type of stop-gap measure to delay middle-class tax hikes and hold off some spending cuts.
The temporary measure would have to get passed by the GOP-controlled House and Democrat-controlled Senate in near-record time, and it still wouldn’t fix the long-term problems that are part of the fiscal cliff debate.
On Sunday, Senator Kay Bailey Hutchison said she expected any action in the waning days of the year to be "a patch because in four days we can't solve everything."
Even getting a stop-gap measure through the Senate will be tricky, since its GOP leadership will need to forgo a filibuster to get a bill passed.
Then, the divided Republican House would need to agree on a measure proposed by Democrats. Last week, GOP House members couldn’t agree on a bill offered by its own leader, John Boehner.
There were reportedly no talks between the sides during the Christmas holiday break, so negotiations won’t start until Thursday.
One rumored stop-gap package would be a delay on taxing households with income under $250,000, an extension of unemployment benefits, a patch to the alternative minimum tax and a delay to spending cuts known as the sequester.
However, there was growing pessimism the Democrats could get any Republican support in the House unless a stop-gap measure include a delayed tax hike for all households and cuts to social programs.
But the Republicans also have to deal with some less-than-favorable factors.
For starters, there will be fewer GOP members in the House and Senate after the New Year, as a new crop of Congress members takes office. And public opinion polls show most Americans will blame GOP leadership if the fiscal cliff becomes a reality.
Making matters more complex is the theory that some Republicans want the steep tax hikes and spending cuts that make up the fiscal cliff to kick in—at least for a few days.
The House could then vote for a compromise measure that would, technically, lower taxes after the Bush-era tax cuts expire. Such a measure would give GOP House members some “cover” in two years when they come up for re-election.
The one factor that could force a stop-gap package before New Year’s Day is a very, very bad reaction from Wall Street.
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So far, investors are watching and waiting to see what happens by the weekend.
In a New York Times article, Julia Coronado, the chief North American economist at BNP Paribas, was pessimistic. “Markets have been incredibly complacent about this,” she said. And investors won’t be happy if the fiscal cliff happens. “The markets will take that hard.”
However, that isn’t a consensus opinion. Some market watchers believe fiscal cliff scenarios have been priced into the market already, while others are expecting negotiations to finalize in January, before much damage happens.
Historically, market trading is light on December 31, but next Monday could be an interesting day, especially if talks fall apart on the weekend.
A bad day on Wall Street could lead to a late night in Washington.