The political class may be focused on the presidential race and the fight for control of Congress. But an enormously intriguing — and consequential — tilt lingers on the other side the election.
At the end of the year, the country will approach a so-called "fiscal cliff," with $8 trillion in tax hikes and spending cuts set to go into effect — and potentially cripple the economy — unless Washington can work out a deal.
Faced with a smaller-scale version of this crisis in December 2010, with the Bush tax cuts set to expire in the midst of a down economy, Congress and President Obama punted — extending the cuts through 2012.
It seems entirely possible that will happen again; Washington has repeatedly demonstrated its inability to seize the opportunity presented by the fiscal crisis and fashion the kind of "grand bargain" — Republicans conceding on tax hikes and Democrats on spending cuts — that could put the nation on the path to fiscal health.
But even if a "grand bargain" appears a long shot, some intriguing ideas for a more forceful resolution have taken shape of late — some of them right here in Rhode Island.
Last weekend, a small clutch of liberal lawmakers including Rhode Island Senator Sheldon Whitehouse descended on the lefty bloggers' Netroots Nation conference in Providence. And in interviews with David Dayen of firedoglake, at least a couple of them suggested they saw political advantage in letting the Bush tax cuts sunset at the end of the year.
Democrats, under this scenario, would then propose a package of "Obama tax cuts" — trimming taxes for those making less than, say, $250,000, but keeping the higher tax rates in place for the wealthy.
Here's the thinking. Much of the GOP has signed onto conservative activist Grover Norquist's anti-tax pledge, making it difficult for Republicans to agree to any sort of tax increase before the end of the year.
But if the Bush tax cuts expire on December 31 and Congress reinstates some of them, presto: "what was a God-awful tax increase becomes a wonderful tax decrease," as Senator Whitehouse put it.
At least some Republicans appear to be eyeing a similar escape hatch. One GOP senator, speaking on condition of anonymity, told the New York Times that the "fiscal cliff" would eclipse Norquist's "pledge" as crunch time arrived.
"You look at what's getting ready to happen, a $5 trillion tax increase, nobody wants that to happen," the senator said. "The pledge becomes irrelevant on December 31."
There is, though, some reason for skepticism.
Norquist, in recent days, has attempted to shut the escape hatch. "I think the American people would look at anything that raised taxes from where they are today to be a tax increase," he told Talking Points Memo.
And the Democratic Party, itself, could find it difficult to stand firm on extending the Bush tax cuts for the middle-class, but letting them expire for the wealthy. At least two senators facing tough re-election fights — Claire McCaskill of Missouri and Bill Nelson of Florida — have suggested they'd be open to letting the cuts stand for everyone.
If they prevail, the punting will continue.