Last-Ditch Summit in D.C. to Avert 'Cliff'
PHOTO: Speaker of the House John Boehner, R-Ohio, arrives for a closed-door meeting with House Republicans as he negotiates with President Obama to avert the fiscal cliff, at the Capitol in Washington, Dec. 18, 2012. President Barack Obama speaks about th

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

NOTABLES:

  • WHITE HOUSE SAYS, NO NEW PLAN: ABC's Jonathan Karl, Sunlen Miller, John Parkinson and Sarah Parnass report that the White House said Thursday it has no plans to offer new proposals to avoid the fiscal cliff which looms over the country's economy just four days from now, but will meet Friday with Congressional leaders in a last ditch effort to forge a deal. The White House announced the meeting after Senate Minority Leader Mitch McConnell, R-Ky., called the budget situation "a mess" and urged the president to present a fresh proposal. But a senior White House official told ABC News, "there is no White House bill." http://abcn.ws/UpszEt
  • THE FISCAL CLIFF AND YOU: Unless there's a deal the fiscal cliff could do real damage to the economy, reports ABC News Business Correspondent Richard Davies. The first and best known impact would be sweeping tax hikes: "By jacking up taxes on so many taxpayers it will squeeze purchasing power," says Greg Ip, U.S. Economics Editor of The Economist. Many consumers and businesses would cut back on spending. "They just decide to pull back not to spend not to buy that house not to initiate that new business venture and that would multiply the negative impact." The third effect would come from sharp and sudden government spending cuts. "You'll see layoffs in the defense industry layoffs in any industry that does business with the federal government as federal spending is cut back sharply."
  • BACK TO WORK FOR HILLARY CLINTON: ABC's Dana Hughes reports that Secretary of State Hillary Clinton will return to work next week after recovering from a stomach virus and a concussion. "The Secretary continues to recuperate at home. She had long planned to take this holiday week off, so she had no work schedule," said Clinton aide Philippe Reines in a statement. "She looks forward to getting back to the office next week and resuming her schedule." The last time Clinton was seen in public was December 7, leaving Northern Ireland after a whirlwind European trip.
  • THIS WEEK ON 'THIS WEEK': Sen. Charles Schumer, D-NY, and Sen. Jon Kyl, R-Ariz., debate the latest on the last-minute efforts to avoid the fiscal cliff, Sunday on "This Week." Plus, ABC News Senior White House Correspondent Jonathan Karl and the powerhouse roundtable debate all the week's politics, featuring former Minnesota Gov. Tim Pawlenty and former Vermont Gov. Howard Dean. Check the "This Week" page for full guest listings. Tune in Sunday: http://abcnews.go.com/thisweek (h/t ABC's Imtiyaz Delawala)

THE NOTE:

'Twas the Friday after Christmas and all through Washington not a deal was stirring, not even at the White House?

With the center of gravity in the fiscal cliff negotiations shifting to the Senate and to 1600 Pennsylvania Avenue, lawmakers and President Obama will try to break the stalemate today at 3 p.m. ET when President Obama and Vice President Joe Biden sit down with Senate Majority Leader Harry Reid, D-Nev., Senate Minority Leader Mitch McConnell, R-Ky., House Speaker John Boehner, R-Ohio, and House Democratic Leader Nancy Pelosi, D-Calif.

There are now just four days to go before the country falls off the cliff, and as ABC's Chief White House Correspondent Jonathan Karl noted on "Good Morning America" today, this is actually the very first meeting all sides have had together in six weeks. The last time this group met was Nov. 16. http://abcn.ws/VGsGrV

That may be hard to believe, but it's not really that surprising when you listen to the rhetoric coming from both Senate leaders.

"Republicans aren't about to write a blank check for anything Senate Democrats put forward just because we find ourselves as the edge of the cliff," McConnell said on the Senate floor yesterday.

Meanwhile, Reid likened Speaker Boehner's leadership in the House to a "dictatorship" that was preventing "the vast majority of the House of Representatives to get what they want."

Most Capitol Hill insiders agree that the we probably go off the fiscal cliff - at least for a little while - with a real deal to come in January after the new Congress is sworn in, but there may be another option on the table.

The two sides could come together to support what Karl described as a "small deal that would at least prevent these tax increases from going into effect for most people."

Chances of that happening? Jon Karl puts them at three to five percent. Not exactly a glass-half-full scenario.

NOTED!

ABC'S AMY WALTER: Perhaps it's because I'm a parent to a six-year-old, but the only way to make sense of the fiscal cliff shenanigans is to put it in child rearing terms. If there is no consequence for bad behavior, then the bad behavior will continue. Think how many times you have heard (or said) "if you don't stop this right now then X will happen." When X doesn't happen (the car doesn't pull over, dessert is still served etc), the child learns that he or she can indeed get away with breaking the rules. In Washington, the only real consequence is losing an election. And, since both sides believe they won in 2012 (Democrats held the White House and Senate despite high unemployment; Republicans held the House despite sky-high disapproval ratings), neither side sees a real downside to letting the country fall off the fiscal cliff. A frustrated public, a declining Dow - these are not the consequences that will spur either side to action. It's only when defeat, real lasting defeat is felt, that compromise will happen.

THE BUZZ:

with ABC's Elizabeth Hartfield ( @LizHartfield)

NORMAN SCHWARZKOPF, GULF WAR COMMANDER, DIES AT 78. H. Norman Schwarzkopf, the retired general credited with leading U.S.-allied forces to a victory in the first Gulf War, died Thursday. He was 78 years old. ABC's Michael James reports, Schwarzkopf, called "Stormin' Norman" because of his reportedly explosive temper, actually led Republican administrations to two military victories: a small one in Grenada in the 1980s and a big one as de facto commander of allied forces in the Gulf War in 1991. "'Stormin' Norman' led the coalition forces to victory, ejecting the Iraqi Army from Kuwait and restoring the rightful government," read a statement by former Secretary of State Colin Powell, who was chairman of the Joint Chiefs of Staff during the Gulf War. "His leadership not only inspired his troops, but also inspired the nation." http://abcn.ws/12Sy0ii

WHITE HOUSE LASHES OUT AT 'CONGRESSIONAL STUPIDITY.' With only days to come up with a deal to avoid the fiscal cliff, the White House said "congressional stupidity" was damaging the economy but that an agreement could be reached if Republican leaders don't get in the way. ABC's Sarah Parnass, John Parkinson and Reena Ninan report, while Boehner has put the onus on the president and Senate Majority Leader Harry Reid, a White House official used testy language to put the responsibility back on Boehner and Senate Minority Leader Mitch McConnell. "What we need is for the Senate Minority Leader not to block a vote and for Boehner to allow a vote," a White House official told ABC News. "The hits to our economy aren't coming from outside factors, they're coming from congressional stupidity." http://abcn.ws/12FUTWY

BUSH 41 GETTING EXCELLENT TREATMENT. The AP's Michael Graczyk reports, "Former President George H.W. Bush, who has been hospitalized for more than a month, is getting excellent medical treatment and would advise people to 'put the harps back in the closet,' his longtime Houston chief of staff said Thursday evening. But Jean Becker also pointed out in her statement that the 88-year-old Bush is sick and likely will be in the hospital for a while after a 'terrible case of bronchitis which then triggered a series of complications.'" http://abcn.ws/12SyEfB

ED MARKEY DECLARES CANDIDACY IN SENATE SPECIAL. The Boston Globe's Mark Arsenault reports, "US Representative Edward J. Markey, dean of the state's Washington delegation, will run in 2013 for the Senate seat expected to open with the nomination of Senator John F. ­Kerry to head the State Department. Markey, 66, a Malden Democrat elected to the House in 1976, is the first prominent candidate to ­declare a run for Kerry's seat, which will be filled through a special election early next summer, probably in June. Kerry, a Democrat and head of the Senate Foreign Relations Committee, is expected to be easily confirmed by the Senate in coming weeks as the next secretary of state." http://bo.st/UvYmEP

SENATORS CHAFE AT INACTION OVER FISCAL CLIFF DEAL. The New York Times Jennifer Steinhauer reports, "Senators bid hasty goodbyes to families, donned ties and pantsuits in lieu of sweat pants and Christmas sweaters and one by one returned to the Capitol on Thursday to begin the business of doing nothing in particular. But for once, those lawmakers were fully united, if only around their sadness and frustration at being stuck in Washington in a holiday week, peering over the edge of the fiscal abyss. Not to be outdone, Speaker John A. Boehner, who failed last week to cobble together enough votes for his own bill, ordered House members to return on Sunday." http://nyti.ms/VloqCm

EXPERTS: TRAINED POLICE NEEDED FOR SCHOOL SECURITY. The AP's Larry Margasak reports, "the student's attack began with a shotgun blast through the windows of a California high school. Rich Agundez, the El Cajon policeman assigned to the school, felt his mind shift into overdrive. While two teachers and three students were injured when the glass shattered in the 2001 attack on Granite Hills High School, Agundez confronted the assailant and wounded him before he could get inside the school and use his second weapon, a handgun. The National Rifle Association's response to a Connecticut school massacre envisions, in part, having trained, armed volunteers in every school in America. But Agundez, school safety experts and school board members say there's a huge difference between a trained law enforcement officer who becomes part of the school family - and a guard with a gun." http://apne.ws/VaJgSq

HAWAII'S BRIAN SCHATZ SWORN INTO SENATE. Politico's Seung Min Kim reports, "Hawaii Lt. Gov. Brian Schatz was sworn in to the Senate Thursday afternoon to replace Sen. Daniel Inouye (D-Hawaii), who died last week of respiratory complications. 'I was pleased to have my family here with me,' Schatz said in brief comments after he was sworn in. 'And of course, we're hopeful to get right to work on averting the fiscal cliff.' Despite his relative youth - he's 40 - and just being sworn in, Schatz will be Hawaii's senior senator. Sen. Daniel Akaka (D-Hawaii) is retiring and will be replaced by Rep. Mazie Hirono (D-Hawaii), who is set to be sworn in next week when the 113th Congress begins." http://politi.co/Uw3VTO

BUDGET WRITERS AT PENTAGON MOVE FORWARD DESPITE SPENDING THREAT. The Hill's Carlo Munoz reports, "The Pentagon is pretending the threat of the "fiscal cliff" doesn't exist when it comes to the Defense Department's 2014 budget. Budget planners are preparing their 2014 budget as if lawmakers will avoid the spending cuts known as sequestration that are scheduled to hit the Pentagon in January." http://bit.ly/WMJUHf

IN THE NOTE'S INBOX:

-OP-ED: THE SENATE SHOULD BLOCK AN END RUN ON NUCLEAR ARMS. John Bolton and John Yoo penned an op-ed in the Wall Street Journal calling for the senate to block an end run on nuclear arms. "President Obama has made eliminating all nuclear weapons his signature policy. In 2011, his New Start Treaty committed the United States to a ceiling of 700 strategic delivery vehicles and 1,550 strategic warheads," Bolton and Yoo write. "Now, as he promised in March, he seeks even deeper reductions through "a step we have never taken before-reducing not only our strategic nuclear warheads, but also tactical weapons and warheads in reserve." But the president faces the Constitution's requirement that two-thirds of the Senate consent to any treaty. In 2010, the Senate ratified New Start with a vote of 71-26, but only after ending a filibuster with the exact 67 votes needed for a treaty. After his nasty re-election campaign, partisan budget wrangling and unfulfilled promises to modernize our nuclear stockpile, Mr. Obama will have a hard time finding 12 Republican senators to support any new nuclear deal with Russia. Senators should block end-runs around the Constitution's treaty clause." http://on.wsj.com/THJsg5

WHO'S TWEETING?

@politicalwire: Why neither side wants a fiscal cliff deal http://politicalwire.com/archives/2012/12/28/why_they_want_to_go_over_the_fiscal_cliff.html …

@ChadPergram: Republican Study Cmte Chair Jim Jordan: Sen Reid and his colleagues should accept the House-passed plan or approve an acceptable alternative

@markknoller: No one holds out much hope the group can reach a deal to avert the fiscal cliff on Tuesday, but stranger things have happened.

@thegarance: "what on earth is Washington doing setting cat policy - polydactyl or otherwise - for Key West, Fla.?" http://trib.in/Tudqk7

@jackshafer: But consider the upside. RT @mlcalderone: "112th Congress Set To Become Most Unproductive Since 1940s" http://huff.to/RW3EKC

@kelleymc: Wishing @susquinn a very happy birthday! xo

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