Fiscal Cliff Deal Close, But Not Done Yet

With midnight fast approaching, whether or not the country will fall off the fiscal cliff of tax increases and spending cuts remains in question.  President Obama said this afternoon that a deal on preventing tax increases for the middle class was close at hand, but the fate of the spending cuts — the so-called sequester — remains unclear and whether the House and Senate can pass anything in the waning hours of 2012 is far from certain.

The Washington Times just reported that House Republican leaders have notified members that no vote will take place tonight on a fiscal cliff deal, though there will be votes on other legislation debated earlier today.   Whether the Senate will vote tonight is unknown.  The newspaper says that the two sides have agreed on tax issues, but are still bargaining over the sequester.

Although attention has been laser-focused on midnight tonight — when existing tax breaks will expire — Congress can, in fact, pass a bill tomorrow or even later and make tax rates retroactive to now.   Deadlines often serve as a motivator to reach agreement, but are not as definitive as they appear.