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Cliff Deal or Not?

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Experts say, 'Don't bet on it.'

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Underscoring the problems that Boehner and McConnell will have in controlling their troops, a handful of conservative lawmakers, advocacy groups and columnists have lambasted Boehner for putting $800 billion of tax increases on the table before getting an iron clad commitment from Obama and the Democrats to support fundamental reforms of Medicare and other costly entitlement programs. Alison Acosta Fraser and J.D. Foster of the conservative Heritage Foundation posted an irate blog saying that the House GOP counter offer at first blush "appears little more than categorical, pre-emptive capitulation" on taxes.

The pervasive pessimism among the Washington experts reflects a broader public view that the talks are headed nowhere, and that the biggest problem is the intransigence of conservative Republicans. If lawmakers send the country over the fiscal cliff by the end of the year, the majority of Americans say congressional Republicans will be to blame, according to a new Washington Post-Pew Research Center poll released on Tuesday. While 53% of those surveyed say they would blame the GOP, only 27% would hold President Obama responsible.

George Hager, a USA Today editorial writer, said, "This is beginning to feel like September 2008 all over again," when the House turned down the first emergency plan to shore up US banks in the middle of the worsening fiscal crisis and the Dow dropped 777 points, its biggest one-day point drop ever. Four days later, a chastened House passed the bill.

"There seems to be a better than even chance that we'll have to learn that lesson again, because Democrats believe Republicans will be more pliable after the cliff, and Republicans think President Obama will own the chaos that would begin in January if there's no agreement," Hager said.

Yet a handful of the experts contacted by The Fiscal Times were upbeat that a deal is doable, and predicted that the Republicans would "blink" and go along with at least some increase in tax rates on the 2% wealthiest Americans, if not as much as the president is currently seeking.

"I think there will be an agreement struck at the last minute after the Republicans complete going through the seven stages of grief and realize that they actually did lose the election," said former Rep. Martin Frost, D-Tex., now a Washington lawyer. "There will be an agreement on revenues that will result in the upper 2% paying some additional taxes though I can't predict exactly what form it will take."

John Zogby, a veteran pollster, said, "I think Boehner will take a deal" to avoid another crisis like the two previous government shutdowns or another downgrading of the US credit rating. "The Republicans are in a checkmate situation," he said.

And Steve Elmendorf, a Washington lobbyist and former senior House Democratic aide, said: "We have four weeks and nobody really wants to fail. They will get a deal with an increase of the top rate and a real process for tax reform and entitlement savings. But it will be Dec. 27 [or] 28. Ho ho ho."

Editor's Note: This article by Eric Pianin originally appeared on The Fiscal Times.

For more from The Fiscal Times:


What Americans Don't Know About Financial Fees

The Worst Retirement Move You Can Make

The Ghosts of Clinton Past Release a New Cliff Deal


Follow The Fiscal Times on Twitter @TheFiscalTimes.
No positions in stocks mentioned.
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