Top Congress Scholar Says Country Could Easily Fall Off Fiscal Cliff In January

A renowned congressional analyst thinks there’s a good chance that the country could fall off a fiscal cliff on Jan. 1, no matter who wins this November.

At an American Enterprise Institute event on the future of Medicare Tuesday, AEI scholar Norm Ornstein outlined a scenario in which Congress falls on its face this winter, and fails to address the expiring Bush tax cuts and payroll tax holiday, automatic sequestration spending cuts, lapse of federal borrowing authority and other spending and tax provisions set to contract the budget automatically at the end of the year.

“Most of the cognoscenti in Washington say, Of course they’ll reach an agreement because they can’t not reach an agreement,'” Ornstein said. “Get inside the belly of the beast and you realize these days they can not reach an agreement.”That’s a real risk, Ornstein said, whether Republicans or Democrats prevail in 2012.

If President Obama wins re-election, Republicans could reclaim the Senate anyhow, which would weaken Obama’s claim to a mandate, and create gridlock both in the lame duck session and the 113th Congress. Even if Republicans don’t reclaim the Senate, they’ll still be broadly opposed to supporting significant tax revenues as a part of any lame-duck deal to avoid the debt. That’s a non-starter for Democrats, and suggests all of these time bombs could go off on Jan. 1, leaving the new Congress and Obama scrambling to undo the damage in the early weeks of 2013.

By contrast, Ornstein said, an across-the-board Republican victory would diminish the GOP’s incentive to cut a deal with Democrats.

“Rather,” Ornstein posited, “to take a hit for the first few weeks in January, and then go for the mother of all reconciliation bills at the end of January or early February, which would leave out most of Medicare, but which would bring tumultuous changes in the process and probably move us not very close toward the path of finding agreement on the policy there.”

A number of members of Congress, including House Budget Committee Chairman Paul Ryan, have suggested that Congress will likely extend the year-end deadlines of all of these automatic tighteners into the new year, to give the new Congress time and space to address them in accordance with the electorate’s wishes.

But the White House isn’t preparing for that contingency, according to senior administration officials, and instead expects a big holiday season confrontation with Republicans over taxes.