The Cliff, The Negotiations And The Deadline

Nov. 12, 2012 -- It isn't taking long for memories of the 2012 election to fade as Washington now fixates on both a scandal and a looming fiscal crisis.

While the GOP soul-searching continues about what went wrong for them last Tuesday, the conversation has shifted to the fast-approaching deadline to avert tax increases and spending cuts that will affect every American.

"Clearly, we have the ability between now and the end of the year to not go off the cliff," Sen. Patty Murray, D-Washington State, told ABC's George Stephanopoulos on Sunday. "But we can't accept an unfair deal that piles on the middle class and tell them they have to support it. We have to make sure that the wealthiest Americans pay their fair share."

On "This Week," Sen. Saxby Chambliss, R-Ga., a GOP member of the "Gang of Six" during last year's debt ceiling debate was not definitive about whether the cliff could be averted by Dec. 31, but said "I certainly hope that happens."

"These are very, very difficult issues to deal with, and ultimately it's going to boil down to reforming entitlements and revenues," Chambliss told Stephanopoulos. "And I assure you, if we don't put politics aside, then we're not going to solve it. So it's imperative that we look at it at the right way now."

THE DEADLINE: ABC's David Kerley explains that the so-called "cliff" comes on Jan. 1, when several tax cuts expire, and severe cuts to government spending are triggered. It's also been called "taxmageddon," because an average American family will see their tax bill increase $3,700 next year The sticking point to solve the stand-off is what the president calls a "balanced approach" of spending cuts and increased revenues. The president campaigned on, and won on, the pledge to allow the tax rates for the rich to rise, while keeping middle class tax rates where they are currently.

THE URGENCY: As ABC News' Business Correspondent Richard Davies explains, the Dow Jones index, S&P 500 and other averages are coming off one of their worst weeks of the year with a drop of more than 2 percent. Economists have issued dire warnings about a possible recession and a new slump for the jobs market if the cliff isn't averted before the January 1 deadline.

THE SALES JOB: President Obama plans to go beyond the Beltway to build support for his approach to fix the budget with tax hikes and spending cuts, Davies notes. Instead of confining itself to private talks with Republican leaders, as it did last year during the debt ceiling crisis, the White House is set to launch a public campaign. With Washington lawmakers back in D.C. this week discussions are likely to pick up speed. One possible compromise suggested by Republicans would increase revenue from wealthy taxpayers by cutting deductions rather than rates.

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