Before The Showdown: The Long Road To The Fiscal Cliff : It's All Politics References to the fiscal cliff, set for Jan. 1, have become ubiquitous in Washington. But many may have forgotten just how and when the looming tax increases and spending cuts were first devised.
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Before The Showdown: The Long Road To The Fiscal Cliff

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Before The Showdown: The Long Road To The Fiscal Cliff

Before The Showdown: The Long Road To The Fiscal Cliff

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  • <iframe src="" width="100%" height="290" frameborder="0" scrolling="no" title="NPR embedded audio player">
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This is MORNING EDITION from NPR News. I'm Linda Wertheimer.


And I'm Renee Montagne. Good morning.

It's Thanksgiving Day. Things are pretty quiet in Washington, D.C. because most members of Congress have gone home for turkey dinner, presumably. They may be resting up before facing another big holiday - New Years - deadline for the fiscal cliff. That's when drastic budget cuts and across-the-board tax hikes take effect, unless Congress and the president agree on a less severe deficit reduction plan.

NPR's David Welna reports on how things got to this point.

DAVID WELNA, BYLINE: It all goes back to some hot, frantic days in late July and early August last year. Treasury officials were warning then that the nation, for the first time ever, was near defaulting on its debt. Congressional Republicans, spurred by Tea Party activists, set off this unprecedented crisis, because they refused to raise the government's borrowing limit unless spending was cut by an equal amount. And they would not accept more revenue as a means to offset a hike in the debt ceiling. More than $2 trillion in deficit reduction had to be found, fast.

Congress hurriedly agreed to a trillion dollars worth of cuts over the next decade. The rest was to be found later by a congressional supercommittee proposed at the time by Senate Majority leader Harry Reid.

SENATOR HARRY REID: It would be a joint committee that would move forward and there would be a trigger, that if they didn't resolve this, then something else would happen. And based on past experiences, I think there would be tremendous incentive not to let that certain thing happen when the trigger kicked in.

WELNA: The certain thing Reid referred to is what's known as sequestration. Lawmakers agreed that if they failed to come up with a deficit reduction plan, draconian across-the-board cuts in federal spending would be triggered January 1st, 2013 - the same day that all the Bush-era tax cuts were set to expire.

At the White House, President Obama gave his blessing.

PRESIDENT BARACK OBAMA: If we need to put in place some kind of enforcement mechanism to hold us all accountable for making these reforms, I'll support that too if it's done in a smart and balanced way.

WELNA: Senate Republican leader Mitch McConnell was also on board.

SENATOR MITCH MCCONNELL: I think I can say, with a high degree of confidence, that there is now a framework to review that will ensure significant cuts in Washington spending.

REID: Congressional expert Ross Baker of Rutgers University says minds, at the time, were not focused on what might be happening five weeks from now.

ROSS BAKER: It was August, you know, August is a time for recesses, it's not the time for serious legislation, and I think that the real problem at the time was trying to insure that there was not a default, they just had to get beyond that.

WELNA: Some Democrats voted for the debt ceiling deal only because it avoided default. One of them was New Mexico Senator Tom Udall.

SENATOR TOM UDALL: Almost everything else about this deal stinks, and it stinks to high heaven.

REID: And some Republicans voted for the deal, even though it could end up shearing a trillion dollars off defense spending. Here's what Arizona Senator Jon Kyl had to say.

SENATOR JON KYL: This should never have been agreed to by members of Congress, but most of all, should never have been promoted by the president.

WELNA: The supercommittee charged with finding additional deficit reduction last year, failed to do so, after Republicans on the panel rejected raising any new revenue. So the trigger for automatic spending cuts was cocked. But in his final debate with Mitt Romney, President Obama seemed to rule out sequestration.

OBAMA: First of all, the sequester is not something that I proposed, it's something that Congress has proposed; it will not happen.

WELNA: Rutgers' Baker thinks the president had reason to trust Congress would prevent sequestration.

BAKER: With a gun at its head, Congress will in fact act, but then and only then.

WELNA: Indeed, after meeting with President Obama last week, Senate GOP leader McConnell and House Speaker John Boehner said there could be a new way to cut deficits.

MCCONNELL: We're prepared to put revenue on the table.

REPRESENTATIVE JOHN BOEHNER: To show our seriousness, we've put revenue on the table.

WELNA: And if lawmakers do hit on a way to mix spending cuts and more revenue to cut deficits and avoid sequestration, New Year's could be cause for celebration.

David Welna, NPR News, the Capitol.

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