After a lot of talk from Washington this week, we could actually be farther away from a fiscal cliff deal than we were before.
Republican House Speaker John Boehner's "Plan B," created to avert a tumble over the fiscal cliff, failed to garner enough support Thursday night from his own party.
Boehner said before the voting that he was confident his Plan B, which proposed extending the Bush era tax cuts, would sail through.
But around 8 p.m., House Majority Leader Eric Cantor, R-VA, emerged and announced the measure wouldn't go up for a vote.
This left the country asking, "What's next for the fiscal cliff?"
Boehner later said in a statement, "The House did not take up the tax measure today because it did not have sufficient support from our members to pass. Now it is up to the president to work with Senator (Harry) Reid to avert the fiscal cliff."
Equity markets reacted by tumbling on the open Friday. A majority of market participants had been optimistic until now, hopeful that a fiscal cliff deal would be reached and a recession in 2013 avoided.
But just 10 days remain before America faces the largest tax increase in history, coupled with steep automatic spending cuts, the outlook for next year has dimmed.
With Congress on recess for the Christmas holiday and no fiscal cliff deal in sight, investors are worried and rightly so.
Fiscal Cliff Deal: Taxes Still the Issue
In a brief 10-minute press conference today (Friday), a frustrated Boehner stressed that if U.S. President Barack Obama and Congress don't come to an agreement by Dec. 31, "taxes will rise for every American and devastating spending cuts to our defense will go into effect."
He added, "I don't want taxes to go up. Republicans don't want taxes to go up."
Boehner had been adamant that he and the GOP wouldn't agree to any deal that included raising taxes.
But realizing that President Obama and his camp was set on a tax hike, Boehner made a compromise: Plan B. The move, however, irked fellow Republicans who maintain an unwavering stance on the tax issue.
Now, not only are Democrats and Republicans at odds, Republicans are fighting amongst themselves.
But the GOP is in agreement when it comes to entitlement spending cuts, keeping defense spending funds in place, and reducing the nearly $16.4 trillion U.S. debt.
As Boehner reiterated Friday, the U.S. "has a spending problem." He went on to explain that President Obama wants "more spending and more cuts that will hurt out economy."
The House Speaker also said that we need to fix our long-term debt problem. Doing so, he said, "Will lead to long term growth that will grow our economy and get people back to work."
Fiscal Cliff Deal Chances Looking Grim
Boehner acknowledged that he was not ruling out further negotiations with the president and would return to Capitol Hill to resume talks if necessary.
Yet, he didn't provide even a glimmer of hope that a deal would be inked by year's end.
After a less than cheery "Merry Christmas," Boehner left Friday's press conference quickly with just a few questions addressed and many more left unanswered.
Art Hogan, Managing Director and Head of Product Strategy at Lazard Capital Markets, and a regular CNBC guest said on the program following Boehner's news conference that the chance of deal by year's end is about 20%.
Hogan continued to say that we might, however, get a stopgap measure that would prevent the widespread tax hikes by the end of January.
By then, a good deal of economic damage could already be done.
Related Articles and News
- Money Morning:
Fiscal Cliff Deal: Boehner Takes a Huge Step
- Money Morning:
Five With Fitz: What to Expect if We Go Over the Fiscal Cliff
- Money Morning:
Three Fiscal Cliff Moves to Make Right Now
Boehner's Plan B fiscal cliff bill pulled amid dissension in GOP caucus
- The New York Times:
New Move Is Obama's Boehner Tax Plan Fails
- The Wall Street Journal:
Recap: Boehner's Friday Press Conference