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Will Republicans call Democrats' 'fiscal cliff' bluff?

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    Political game of chicken over threat of massive tax hike

  • Duration 4:51
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A political showdown over a massive tax hike is beginning to look a lot like a trillion dollar game of chicken.

Democrats threatened to throw the nation over a fiscal cliff unless Republicans agree to raise taxes many Republicans.

Say they are ready to call their bluff.

Yesterday a top senate Democrat practically dared the GOP to ignore Democrat demands.

I -- Will absolutely continue this debate -- -- thirteen.

Rather than -- in a long term deal this year that throws middle class families under the -- But the Democrats are proposing today is an entirely avoidable.

Politics game a -- them.

So what are they -- about months get into it with -- AB Stoddard associate editor of the hill.

The bush tax cuts set to expire on January 1.

Everybody in Washington seems to think there ought to be some kind of extension the question is how much and Democrats -- said okay.

If you don't if you Republicans don't allow the taxes on the wealthy to rise.

We're gonna just let the tax cuts expire for everybody and everybody's taxes are gonna go up -- I had a right.

You do but it's not that simple -- sit because we're talking about these defense cuts and other domestic spending cuts that are set to kick -- at the same time.

We're also gonna see the end of unemployment insurance the Medicare doc fix.

The estate tax cut will expire we're gonna see unemployment insurance all all sorts of things.

Are going to be on the table for this eight trillion dollar fiscal cliff.

And so that will change that the contours of the compromise that's ultimately reach.

Both sides are scaring the voters right now with his campaign rhetoric.

No no one knows what they're -- will be on the morning of November 7 when this really.

When the real work on this weekend so all this right now it's just talk about Republicans are as guilty as the Democrats were threatening.

To take the economy hostage Republicans are saying.

And Dick Cheney will come up and repeat this to them this week that that these pentagon cuts are not a threat to our security -- -- the economy.

Military planners are planning right now.

-- layoffs.

Two to prepare for these cuts and did take place in January but they're not gonna come up with a deal that's gonna pass the congress.

Just state to save them and they voted for them by the way.

You know for November -- -- none of this is happening before fess -- that.

Before November -- this fiscal cliff.

Will be dealt with on November -- The the sequestration cuts and we've been talking about the cuts to the Pentagon.

We're designed to be absurd that they were designed to be so onerous and so crazy.

That no member of congress nobody in the administration was gonna let them happen and yet here we are what five months away or so.

And people are talking about the real possibility that they could happen.

It's talk very real -- John the thing is when the debt deal was reached on August -- and have 2011.

There's there's a real hopes they played on the American people both parties decided upon those two super committee they knew this super committee would not come -- with.

This grand -- and it into the grand bargain that is so elusive that no one will ever agree issue.

So then in November we found out that indeed the triggered cuts known as sequestration we're gonna take place.

All along -- when they wrote this into the law they knew that these could be on done between November 7.

And Christmas Eve morning -- 2012.

So they still have time to stop them.

It's too it's getting later it's getting more onerous and and more damaging.

To to -- Defense Department into our economy.

Should make this deal later but they know they have a few weeks to make this deal before January a thirteen comes -- so that's why.

They agreed to in the first place in both parties voted for but that this is a town where bipartisanship.

Doesn't seem to work I mean you Simpson bulls didn't work.

The super committee didn't work how are they going to make it work in that relatively short window of time between November 7.

And and January 1.

Well that is the big question and it's really it's -- is already hindering economic growth there's no reason for American companies to hire right now.

End before the election we we can't see this economy changing because no one knows or taxation rates.

Both parties are hoping -- that morning they come up with more leverage -- they think they have now and I don't see it I think that we still have a chance of having.

An election that doesn't really provide either party a mandate.

Leaves us where -- where we are now may be Democrats make gains while Romney wins or President Obama is reelected while Republicans make gains that we could really -- a situation.

-- where neither party has a mandate and then they're gonna have to make serious concessions.

And I don't know if either party is prepared for that but -- and -- members up here and nobody much likes to make concessions in Washington seems AB Stoddard from the hill a.

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