Now that a deal has been reached in Washington, questions emerge about what happens now with America's finances. Chief economist at Mesirow Financial Diane Swonk clarifies what this deal means.
Though the deal avoids going over the fiscal cliff, the focus needs to be on improving the U.S. reputation in the financial market around the world. She says we need to take Moody's and Fitch's threats to be downgraded seriously. She says, “There’s a false sense of security. Remember, we were sort of as some people put it the cleanest shirt in the dirty shirt pile. At the same time we got downgraded, the Federal Reserve was counteracting the downgrades with massive movements to buy treasury bonds and the massive flight to safety. The U.S. was looking bad, it was looking better than Europe was and financial markets in the U.S. because we are a reserve currency, we’ve gotten the benefit of that for some time now.
While the House struggled to reach a compromise, President Obama released his two secret weapons: Vice President Joe Biden and Senator Mitch McConnell. CNN contributors John Avlon and Margaret Hoover discuss their success.
Hoover says, “We found the secret formula, the Biden/McConnell alchemy works, the president and John Boehner can’t get it done together.”
Avlon sees the broader picture of where the process failed. He points the finger at the Republicans in the House of Representatives, saying, “Speaking of losers, the House Republicans’ reputation is the problem child in Washington. It has been solidified by this whole last-minute scramble and that is a serious problem. They’ve always been the least popular cohort in Washington. Never popular to begin with, they’re seen in their own conference as the problem."
Hoover commends their experience and their time spent a different world of politics in Washington. She says, “A lot of people are asking why doesn’t Washington work the way it used to. In a former iteration of Washington, senators, congressmen knew each other personally; they knew how to sit down and negotiate at the bargaining table. In the end, these two men are vestiges of the old Washington and in the end they saved the day.”
As for John Boehner's colorful words for Harry Reid at the White House a few days ago, Avoln sees it as a prediction for the months ahead. He says, “Never forget, politics, in the end of the day, is people in a room, personalities and how they work and sometimes things get ugly. […] But, that bad blood is an indication of why we’re in for a rocky time especially in the next two months, but also the next two years.”
Finally reaching an agreement, but barely starting to pick up the pieces, the fiscal cliff has been avoided. But, according to Sheila Bair, former chair of the FDIC and current chair of the Systemic Risk Council had some insight for Ali.
She says, "The tax system is broken, the entitlement system is broken and we haven’t even gotten to immigration reform, infrastructure. There are so many problems that need to be addressed and we need a functioning government to deal with them and it takes so long just to get really small deals like this done."
her criticism wasn't just reserved for America's representatives. She had some respectful criticism for the president as well, saying, "We need to find a governing coalition in the country and the president, with all due respect, needs to reach out to Republicans instead of bashing or heckling them. […] The partisanship needs to stop. We need to govern not from the hard liners but the middle.”
As Congress gets ready to meet at 11AM for final discussions on avoiding the fiscal cliff, Senator Johnny Isakson from Georgia has faith in the players involved.
He says, “Any time you’re putting a deal together, it’s always the details that will kill you, and you have to get the details done. There’s a lot of back room operation going right now, making sure all the I’s get doted and T’ get crossed. I’m sure a final deal hasn’t been agreed to, but as long as Mitch McConnell and Joe Biden are talking- remember they’re the two that made it possible to get the last deal done. So, we’ve got our best two negotiators at the table.”
With less than a day before the U.S. hits the fiscal cliff, Maryland Congressman and ranking member on House Budget Committee, Chris Van Hollen has a positive attitude. He says, “I think there is good news. The conversation continued late in the the night last night. I think now there’s a better that 50-50 chance we will avoid the fiscal cliff by midnight tonight….everyone’s focused on trying to get the job done.”
As to what needs to be done now, he says, “The reality is that they’re going to have to get it together, the majority of the house that is. So we are continuing to provide input into those discussions to try to make sure there’s no miscalculation. To try to make sure that whatever emerges from the senate can indeed get a majority in the house.”
With Democrats and Republicans still disagreeing on the fiscal cliff crisis, Representative from Utah and serving on the House oversight Committee, Jason Chaffetz got up early to chat with Ali and Christine.
“The ball is in the Senate’s court. The House of Representatives did its job. We passed a bill on August 1st. It extended out every one of the rates and if the president and Senate don’t like it, it is their responsibility to make an amendment, make the change, have a vote, and send it back over to us. We have done our jobs,” he says.
Without enough support for Speaker of the House John Boehner’s “Plan B” the House Republicans did not even vote on it. Boehner released a statement saying, “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 Reid to avert the fiscal cliff.” The House then recessed for the holidays. DNC Chair Debbie Wasserman- Schultz spoke to Soledad on this morning’s Starting Point.
The Florida Congresswoman responds to the Speaker’s statement, saying, “It’s really challenging to understand why instead of continuing to do the hard work of the last few steps they had to take to get to a deal, that the speaker instead decided to jam us, and put something on the floor that they couldn’t pass out of their own caucus because it is so extreme.”
There are only 12 days left until the country reaches the fiscal cliff and we still don’t have a decision. Today the House Republicans will vote on Speaker Boehner’s “Plan B.”
Senator John Barrasso, Republican from Wyoming, tells Soledad what he sees for the country’s future.
He says, “53 democrats have already voted to support that in the senate earlier this year so I think it’s wrong for the president to say he’s going to veto it. It’s an opportunity to make permanent the lower tax rates for 99% of Americans. So, I think the House as leader Boehner said, will pass it today.”
The failure to reach a compromise has been surrounded by all sorts of rumors involving taxes. Senator Barrasso explains the House’s, as well as his, main goal with Plan B as, “I think we shouldn’t raise taxes on anyone. But, if we can make permanent these lower tax rates for 99% of all Americans, I think that’s a responsible thing to do and the president ought to embrace it.”