'Doomsday' For The Fiscal Cliff? (The Note)

By MICHAEL FALCONE ( @michaelpfalcone ) and AMY WALTER ( @amyewalter )

NOTABLES:

WILL MORTGAGE DEDUCTIONS FALL OFF THE CLIFF? ABC will take a look at a handful of specific revenue sources as fiscal-cliff talks continue, and today ABC's Shushannah Walshe reports on the home-mortgage deduction: The mortgage deduction has been fiercely guarded until now, although it costs the government over $100 billion a year by most estimates, because of the sentimental attachment to it and the idea that it helps middle class families afford homes. While those who benefit from the deduction, including homeowners and people in the real estate industry, are passionate about keeping the deduction in place, others say it should be eliminated because it overwhelmingly helps the wealthy and those who can afford to buy a home already. http://abcn.ws/SG8Gal

CABINET SHUFFLE - GEITHNER ON HIS REPLACEMENT: With Treasury Secretary Timothy Geithner wrapping up his time in President Obama's cabinet, ABC's George Stephanopoulos asked him if banking executive Jamie Dimon - who has billionaire Warren Buffett's endorsement - should be named the next treasury secretary, but Geithner declined to answer directly. "The president's going choose somebody very talented to lead the Treasury for his next four years. And - I'm very fortunate I've been able to work with him to help solve these problems in the country over this period of time. And I'm very confident he's going have somebody in place - in January to succeed me," he said. http://abcn.ws/SDY0Jw

SEEKING ADELSON'S MILLIONS: Politico's Ken Vogel reports that the 2016 fundraising landscape is already taking shape: "A week after Election Day, three Republican governors mentioned as 2016 presidential candidates - Bobby Jindal, John Kasich and Bob McDonnell - each stopped by the Venetian Resort Hotel Casino to meet privately with its owner Sheldon Adelson, a man who could single-handedly underwrite their White House ambitions. Planning a presidential campaign used to mean having coffee with county party chairs in their Iowa or New Hampshire living rooms. The courting of Adelson, a full four years out from 2016, demonstrates how super PAC sugar daddies have become the new must-have feature for White House wannabes. ? Maryland Gov. Martin O'Malley is meeting with big donors in Los Angeles this week and has a fundraiser scheduled for next Monday in the Washington suburbs. Vice President Joe Biden, Republican Texas Gov. Rick Perry and Sen. Mark Warner (D-Va.) have been meeting with big donors, leaving the impression that they're ready to run." http://politi.co/TCHafq

WHITE HOUSE WATCH: Here's what's on the president's agenda today, courtesy of ABC's Mary Bruce: This afternoon President Obama meets with Prime Minister Boyko Borissov of Bulgaria. Later, at 4 p.m. the president delivers on-camera remarks to the Nunn-Lugar Cooperative Threat Reduction symposium. On the 20th anniversary of the CTR program, the president will note the progress that's been made in securing nuclear material, and thank Senators Nunn and Lugar for their leadership on these issues, according to the White House.

THE NOTE:

After a week when both Republicans and Democrats dug in in their heels on the fiscal cliff negotiations, Treasury Secretary Timothy Geithner told ABC's George Stephanopoulos that the ball is "absolutely" in the GOP's court.

"We think we have a very good plan, a very good mix of tax reforms that raise a modest amount of revenue on the wealthiest 2 percent of Americans, combined with very comprehensive, very well designed, very detailed savings that get us back to the point where our debt is stable and sustainable," Geithner said of the proposal he presented to Republican leaders on Capitol Hill last week in a "This Week" interview.

Only problem is, Republicans say the Obama administration's proposal is about as far away from a "good plan" as you can get.

"I would say we're nowhere. Period," House Speaker John Boehner said in an interview on "Fox News Sunday." "We've put a serious offer on the table by putting revenues up there to try to get this question resolved. But the White House has responded with virtually nothing." http://abcn.ws/VpplQj

So it may not be surprising that the GOP is considering what ABC's Jon Karl is calling a "Doomsday Plan" if fiscal cliff talks collapse entirely.

Here's Karl's latest reporting:

It's quite simple: House Republicans would allow a vote on extending the Bush middle class tax cuts (the bill passed in August by the Senate) and offer the president nothing more - no extension of the debt ceiling, nothing on unemployment, nothing on closing loopholes. Congress would recess for the holidays and the president would face a big battle early in the year over the debt ceiling.

Two senior Republican elected officials say this Doomsday Plan is becoming the most likely scenario. A top GOP House leadership aide confirms the plan is under consideration, but says Speaker Boehner has made no decision on whether to pursue it.

Under one variation of the plan, House Republicans would allow a vote on extending only the middle class tax cuts and Republicans, to express disapproval at the failure to extend all tax cuts, would vote "present" on the bill, allowing it to pass entirely on Democratic votes.

By doing this, Republicans avoid taking blame for tax increases on 98 percent of income tax payers. As one senior Republican in Congress told me, "You don't take a hostage you aren't willing to shoot." Republicans aren't willing to kill the middle class tax cuts, even if extending them alone will make it harder to later extend tax cuts on the wealthy.

Still unclear under this plan is what would happen to the automatic defense cuts - "sequestration" - scheduled to go into effect on January 1 without a deficit deal. During the campaign, the President promised the cuts would not happen. As part of the deal to allow the House vote on taxes, those automatic defense cuts could be put off for a year.

Watch Karl's "Good Morning America" report: http://abcn.ws/R0Y60R

PREDICTIONS:

-TIM GEITHNER ON 'THIS WEEK': "I actually think that we're going get there. I mean, you know, just inevitably going be a little political theater in this context," Geithner said, when asked whether Senate Minority Leader Mitch McConnell laughed after hearing President Obama's plan to avert the fiscal cliff. "Sometimes that's a sign of progress. Think we're actually making a little bit of progress, but we're still some distance apart."

-SEN. LINDSEY GRAHAM: "I think we're going over the cliff," South Carolina Republican Sen. Lindsey Graham said on CBS's ""Face the Nation." On the Democrats' proposal: "This offer doesn't remotely deal with entitlement reform in a way to save Medicare and Medicaid and Social Security from imminent bankruptcy. It raises $1.6 trillion on job creators that will destroy the economy, and there were no spending controls."

"THIS WEEK" REWIND:

-GEITHNER: SOCIAL SECURITY OFF THE TABLE IN THESE TALKS. Treasury Secretary Timothy Geithner also told ABC's George Stephanopoulos that, while Social Security may need reforms, they shouldn't be part of the fiscal-cliff discussion. Geithner: "What the president is willing to do is work with Democrats and Republicans to strengthen Social Security for future generations. ? But we think you have to do that in a separate process, so that our seniors aren't-don't face the concern that we're somehow going to find savings in Social Security benefits to help reduce the other deficits. ? We are prepared to, in a separate process, look at how to strengthen Social Security, but not as part of a process to reduce the other deficits the country faces." WATCH: http://abcn.ws/YpFVFc

-COLE: REPUBLICANS DON'T NEED TO OFFER A PLAN YET. Rep. Tom Cole, who broke ranks with his party last week by suggesting House Republicans follow President Obama's proposal to immediately extend only lower-income tax rates, appeared on ABC's "This Week" roundtable, saying his party doesn't need a specific fiscal-cliff plan just yet. Cole: I don't think we need to put a formal proposal out on the table. The speaker has already said revenue is on the table. He has got an idea about how to get there in terms of not raises rates, but finding it in other ways through tax code reform. I think that makes a lot of sense, and that's a doable thing, but beyond that, you know, we'll wait and see how the negotiations go." WATCH: http://abcn.ws/YpHjYD

PRAISE FOR JAKE TAPPER'S 'THE OUTPOST.' With Republicans and Democrats divided on the fiscal cliff negotiations, one thing both sides seem to agree on is Jake Tapper's book, "The Outpost: An Untold Story of American Valor. (As a refresher, in the book Tapper explores one of the deadliest attacks in Afghanistan - the attack on Combat Outpost Keating by Taliban insurgents on the morning of October 3, 2009. Tapper's expos? closely examines the history of the camp and the heroic stories of these American soldiers and their families through first person accounts, photographs and extensive research.) http://www.tinyurl.com/OutpostBandN MSNBC's Rachel Maddow called it a "?very readable, very impressive, well reported book." Fox News' Sean Hannity said "?I love the book. And it's really terrific. Very well researched. You went to Afghanistan, you talked to all these guys, 250 people. And it's really well done."

@newtgingrich: Jake tappers the outpost is a remarkable story of modern war. I recommend it highly

@BeschlossDC: Read Jake Tapper's mesmerizing & important THE OUTPOST-essential to understand the astonishing modern experience of our soldiers in battle.

@Seth Meyers21: I highly recommend @jaketapper's new book "The Outpost." A great read from a great reporter.

@MikeBarnicle: Definition of a rewarding time: Spending the evening reading Jake Tapper's book "The Outpost." Buy it.

@samsteinhp: Just finished @jaketapper's The Outpost. Buy it. Great reporting, fantastic read.

@jdickerson: Congratulations to @jaketapper for his amazing book The Outpost.

THE BUZZ:

with ABC's Chris Good ( @c_good)

A TOUGHER POTUS. Comparing the president's fiscal-cliff posturing to his past methods in fiscal negotiation, The New York Times' Peter Baker writes: "His approach is born of painful experience. In his first four years in office, Mr. Obama has repeatedly offered what he considered compromises on stimulus spending, health care and deficit reduction to Republicans, who either rejected them as inadequate or pocketed them and insisted on more. Republicans argued that Mr. Obama never made serious efforts at compromise and instead lectured them about what they ought to want rather than listening to what they did want." http://nyti.ms/TD6guO

OBAMA: GOP HOLDING TAX-CUTS 'HOSTAGE.' In his weekly radio address on Saturday, President Obama warned that it's "unacceptable for some Republicans in Congress to hold middle class tax cuts hostage simply because they refuse to let tax rates go up on the wealthiest Americans," ABC's Mary Bruce reports. http://abcn.ws/TGPIiu

THE CLIFF SKEPTICS. Bloomberg's Julie Hirschfield Davis reports: "[A] small and potentially influential group of lawmakers in both parties is emerging as fiscal-cliff skeptics, willing-and some even arguing-to take the dive. ? Senator Patty Murray of Washington, the fourth-ranking Democrat in the leadership, said her side is willing to push the debate into 2013 if Republicans refuse to raise taxes on high earners as part of the deal. ? The doubters' caucus remains small, as most lawmakers are urging Republican leaders and Obama to reach an agreement and avoid sending yet another shock to the fragile economic recovery." http://bloom.bg/UBDag0

WHY GROVER NORQUIST STILL CONTROLS THE GOP. The Washington Post's Peter Wallsten reports: "Sen. Saxby Chambliss (R-Ga.), for example, might have seemed a perfect illustration of the trend away from Norquist's hard-line views when he said recently that policies backed by Norquist would lead to more debt. ? But five days later, on the phone with Norquist, Chambliss was sounding a conciliatory tone. As Norquist read aloud a transcript of Chambliss's earlier remarks, item by item, Norquist recalled later, the senator repeatedly assured him on each one that he did not mean to imply they had major differences when it came to GOP principles on taxes. 'He said he'd wished he hadn't invoked my name and wished that he'd been clearer,' Norquist recalled from the Monday conversation." http://wapo.st/UkdS3D

J.C. WATTS FOR RNC CHAIR? With the Republican National Committee set to vote whether to retain chairman Reince Priebus in January, Politico's John Bresnahan reports: Former GOP Rep. J.C. Watts says he is being "encouraged" by supporters to run for chairman of the Republican National Committee, a move he says could broaden the party's appeal to minorities. Watts is not formally entering the race, and he is not critical of current RNC Chairman Reince Priebus, who has already announced he will second term in the post." http://politi.co/VfWbRu

MORE ON ADELSON'S MILLIONS: WHAT HE SPENT ON 2012. How much did billionaire casino magnate Sheldon Adelson, a megadonor to GOP super PACs, spend trying to defeat President Obama in 2012? Peter H. Stone reports at Huffington Post: "Sheldon Adelson vowed to spend as much as $100 million to defeat President Barack Obama and help the GOP take control of Congress. According to two GOP fundraisers with close ties to the Las Vegas billionaire, he made good on that promise - and then some. Adelson ultimately upped the ante, spending closer to a previously unreported $150 million, the fundraisers said." http://huff.to/TD1w8g

WOMEN IN POWER: TOP STATES. ABC's Jilian Fama reports: This year, 1,773 women will be taking the oath of office to serve in their states' legislative bodies. In January, after they are sworn in, women will make up 24 percent of all state legislatures - and the number may grow because four state legislative races with at least one female candidate in the running remain undecided. Colorado is leading the pack with the highest percentage of female legislators serving. In 2013, Colorado will have 41.5 percent state House representatives who are female (27 female out of 65 total) and 40 percent state Senate members (14 out of 35). Thirty are Democrats and 11 are Republican. Other states leading in female representation are Vermont, Arizona and Hawaii. http://abcn.ws/QBDVFn

SECOND TIME'S THE CHARM FOR CONGRESSIONAL HOPEFULS? "Running for Congress? The second time might be the charm," Roll Call's Shira Toeplitz reports. "Just ask recent victors such as Reps.-elect Garland "Andy" Barr IV, R-Ky., Ami Bera, D-Calif., and Ann McLane Kuster, D-N.H. They defeated their respective opponents on the second try. There will be an entirely new landscape in 2014, and some November losers believe they might have a better shot in two years. If history is precedent, the midterm elections will provide more opportunities for the party not occupying the White House: Republicans. What's more, in two years, many Democrats won't be able to count on the boost of the president's effective turnout operation. Accordingly, more GOP losers than Democratic candidates are already mulling comeback bids for certain seats. But there are opportunities for Democrats in 2014 as well. Republicans controlled redistricting in most key states during the decennial mapmaking process. The GOP didn't release maps until late in the cycle, forcing last-minute campaigns for otherwise competitive seats." Read Roll Call's list of possible "two-timers": http://bit.ly/R0Si7P

OBAMA HOSTS KENNEDY CENTER HONOREES AT WHITE HOUSE. ABC's Matthew Larotonda reports on the black-tie event: Seven entertainment icons were hosted at the White House today for their contributions to the performing arts. Actor Dustin Hoffman, blues guitarist Buddy Guy, ballerina Natalia Makarova, and comedian David Letterman were given a reception with the three surviving members of Led Zeppelin before the annual Kennedy Center Honors gala this evening. President Obama welcomed the performers before they were presented their awards at the event later in the evening. The president joked that the motley crew's presence continued "a tradition at the White house by honoring some extraordinary people with no business being on the same stage together." http://abcn.ws/SrHXyD

HILLARY AND MERYL. A photo of Hillary Clinton and actress Meryl Streep at the awards event is going viral, ABC's David Muir reported for "World News.' WATCH: http://abcn.ws/SGgngV

CONSTITUTION WAITS FOR NO MAN'S INAUGURATION. Thanks to a calendar quirk, President Obama's second inauguration will come in two parts, ABC's Ann Compton reports: [T]he traditional parade with its bands and floats will not march on January 20th, the day the Constitution requires the President to be sworn in. That falls on a Sunday this time so by tradition there will only be a small Sunday ceremony for the oath-taking at noon. This calendar clash happens every few decades. For Ronald Reagan's second swearing in in 1985, a brief ceremony was held in the Grand Foyer on the state floor of the White House at 12 noon on Jan. 20, with a group of invited guests. It was televised live. But the parties and parades had to wait 24 hours. http://abcn.ws/RwauG7

OBAMA PLAYS GOLF WITH CLINTON. President Obama sought Bill Clinton's help the last time the Bush tax cuts were set to expire, huddle with the former president at the White House and ultimately handing him the podium at a press briefing in December 2010. ABC's Matthew Larotonda reports, Obama played golf with Clinton, U.S. Trade Representative Ron Kirk, and former Clinton aide/current Virginia gubernatorial candidate Terry McAuliffe yesterday.

IN THE NOTE'S INBOX:

-MOVE ON MEMBERS CHIP IN TO PUT ELIZABETH WARREN IN SENATE BANKING POST. MoveOn.org members have contributed nearly $150,000 since last Wednesday Nov. 28 to stop the banking lobby's attempts to keep Elizabeth Warren off the Senate Banking Committee, according to a spokesperson for the group. Members received an e-mail fundraising petition saying, "Elizabeth Warren hasn't even been sworn in yet. She hasn't hired most of her staff. And already Wall Street lobbyists are scrambling to cut her off at the knees by keeping her off the Senate Banking Committee. According to multiple sources, Wall Street 'has been going nuts' to keep her off the committee.1 And it's not hard to see why. She's an expert on the issues. She has no conflicts of interest. She's PERFECT." Move On plans to use the money raised from what they are calling the "emergency campaign" to rally their members and run ads in support of Warren. Notably, Move On members raised more than $1 million to help elect her, the group said.

WHO'S TWEETING?

@edatpost: Welcome to the @twitter: @pontifex, better known as Pope Benedict XVI

@bethreinhard: Marco Rubio: Climate-change denying, evolution-questioning, Senate Science Committee member http://njour.nl/Ub7U2K

@HowardKurtz: Obama's Hashtag Army: A look at the president's use of Twitter and #My2K as an organizing tool in fiscal cliff battle http://bit.ly/UBANty

@ezraklein: . @jeffreygoldberg makes the case for Susan Rice as Secretary of State, and has a very amusing first paragraph: http://www.theatlantic.com/international/archive/2012/11/why-susan-rice-would-be-a-plausible-secretary-of-state/265636/ ?

@brianstelter: NYT publisher announces he's asked newsroom to "identify significant cost savings - including buyouts - throughout The NYT Media Group."

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Source: http://news.yahoo.com/doomsday-fiscal-cliff-note-141516280--abc-news-politics.html

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