(Lack of) Progress Report

Negotiations between Republicans and Democrats to avert the fiscal cliff apparently went nowhere this week. Public utterances by the major players in Washington indicated that their well-known political orthodoxies are as entrenched as before the Presidential election. Thus, for example:

- Treasury Secretary Geithner, when asked in a television interview whether the Administration was willing to let the economy slip over the fiscal cliff if the Republicans did not agree to income tax rate increases for the wealthy, responded, "oh, absolutely". “There is no prospect (for) an agreement that doesn’t involve rates going up on the top 2 percent of the wealthiest Americans,” he told CNBC.

- House Speaker Boehner briefed the Press, very briefly, this morning. He began by noting, tersely, that he was not providing a progress report, because "there is no progress to report".  He characterized this past week as "wasted", as the President's negotiating position was nothing more than a reiteration of his campaign promises - "his way or the highway", as the Speaker described it. His phone discussion with the President earlier this week was "pleasant", but essentially just more of the same. Though widely anticipated, there was no face-to-face follow-up meeting with the President.

- Not to be outdone, House Democratic Minority Leader Nancy Pelosi spoke to the press right after Speaker Boehner, and immediately after meeting one-on-one with the President. Her message, much the same as Secretary Geithner's,  was that the only thing standing in the way of "middle-income tax relief" was the Republican's refusal to allow rates to rise on the wealthy. Her stated objective was to ensure that everyone "pays their fair share".

So, with 24 days left before the hesitant economic recovery in America slips over the cliff, it appears that expectations  this week for progress towards fiscal resolution were unwarranted. Curiously, perhaps, US equity and bond markets seemed mostly unfazed (the Dow and S&P 500 were up on the week) by the evidence of persistent stalemate. Maybe they simply had no expectation to begin with, or have moved beyond cliff concerns, recognizing that the gravity of fiscal imbalance is such that, if Washington can't fix it, markets will, forcing resolution upon squabbling politicians sometime soon.