Has Washington Tried to Solve the Fiscal Cliff In the Past?

This entry is part 6 of 9 in the series The Fiscal Cliff Explained

Part 6 – Has Washington Tried to Solve the Fiscal Cliff In the Past?

There are 4 components in this section of The Fiscal Cliff Explained:

, their efforts to avoid a filibuster forced them to accept a 10-year expiration date.

In late 2010, both President Obama and Congress passed legislation extending the Bush tax cuts for two years, agreeing that the economy was too weak for a tax hike. The deal was also contingent on a two-year extension of federal unemployment benefits, which were included in the 2009 stimulus, a one-year payroll tax holiday to replace another tax break in the stimulus (later extended to two years), and the extension of a few other tax breaks from the stimulus. All of these provisions are due to expire at the end of this year, which is why they’re part of the austerity crisis now.

Simpson/Bowles and the Gang of Six

While they were still grappling with a foundering economy, leading Republicans and Democrats also became increasingly concerned about the growing deficit, which the financial crisis and recession significantly exacerbated. To that end, Obama created the Simpson-Bowles commission in 2010, whose members created a recommended framework for $4 trillion in deficit reduction. But the plan did not attract the required 14-vote supermajority to be sent to Congress. Later, a bipartisan group of senators known as the Gang of Six tried to build on Simpson-Bowles to formulate their own deficit reduction plan, but their effort, so far, hasn’t had any more luck.


In 2011, the new GOP-led House was demanding that the federal government reduce its deficit as a condition of raising the debt ceiling. Obama and Boehner tried to hammer out a deal, but the talks ultimately fell apart as Boehner rejected the president’s demand for more revenue.

Ultimately, to avert a debt-ceiling crisis, Congress and the White House passed legislation in August 2011 known as the Budget Control Act, which had nearly $1 trillion in upfront cuts and established a Congressional committee to come up with $1.2 trillion more in deficit reduction by late November 2011. If the supercommittee failed to agree upon a deal, the across-the-board cuts to both defense and non-defense spending—i.e. the sequester—would be automatically scheduled to take effect after Dec. 31.


The 12-member supercommitee deliberated through the fall of 2011, but ultimately failed to come to an agreement by the deadline. The main obstacle, once again, was revenue. Republicans rejected the Democrats’ proposed tax increases and Democrats spurned the Republicans’ revenue offers as too paltry. Even after the supercommittee failed, Congress could have independently passed a deal that reduced the deficit by $1.2 trillion to avoid the sequester cuts. But the 2012 campaign soon took precedence and both parties agreed that nothing would get done until after the election.

That’s why we’re now facing the sequester, on top of the Bush tax cuts and other provisions that were already scheduled to expire on Dec 31: They’re all policy decisions that Congress has made (or failed to make) over the past two years, piled onto a single deadline.

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