backing away from the brink

As we approach the fiscal "cliff" and related policy questions, it's important to keep in mind several deadlines, some real and unchangeable and some soft and more flexible.

1. Midnight, December 31. That's the time the expiring laws -- like the Bush tax cuts, the narrower alternative minimum tax [AMT], the Medicare "Doc Fix," extended unemployment insurance, and lower payroll tax -- actually expire. While legally significant, in practice Congress can make any new tax provisions retroactive. If lawmakers act fast enough, there would likely be no real impact on taxpayers. Moreover, missing this legal deadline also transforms the vote on any legislation into a "tax cut" from the restored rates.

2. January 1. That's when the Treasury Department says the U.S. debt would reach its legal ceiling, absent extraordinary measures. Not an immediate problem, however, since Treasury plans to take those steps, like delaying some intragovernmental financial transfers, as it has many times before. The real deadline can be pushed off until late February or so. Even then, in extremis the president might invoke the 14th amendment which arguably would make the debt ceiling law unconstitutional. Nevertheless, breaching the ceiling would force the United States into default on its debts in the view of the financial community.

3. January 2. That's the day that the 2011 Budget Control Act's sequester kicks in, requiring broad cuts in current spending across the government during the rest of the fiscal year. The actual cuts could be delayed for a while if there were a real prospect of a budget deal, since implementation is up to the Office of Management and Budget [OMB]. Or Congress could substitute some new law, either a grand bargain of many of the unresolved issues, or a kick-the-can-down-the-road law that imposes a different set of cuts totaling $110 billion over the next nine months.

4. Noon, January 3. That's the hour that the 112th Congress ends and the 113th Congress begins. If a bill hasn't quite passed, it's dead, and the new Congress would have to pass identical versions after that hour for the president to have a bill to sign. [There are historic examples when one chamber or the other literally stopped the clock for a few hours in order to squeeze within a legal deadline, but that can't happen with the change from one Congress to the next. Just as doubts over Chief Justice Roberts' erroneous wording of the Obama presidential oath, leading to a just-to-be-safe second swearing in, the risks of a legal challenge would make the noon deadline rigid.]

5. Afternoon, January 3. That's when two important events should have happened --the election of a Speaker of the House and adoption of some organizing motions by the Senate. If Republican rebels want to challenge John Boehner, that's their moment for action -- and perhaps a reason why Boehner has been reluctant to support a deal with the administration that increases taxes. Similarly, if the Senate adopts changes in its rules or procedures -- or gets into a big fight over the rules that poisons the legislative process for weeks to follow -- that will affect how easily any agreements may be handled by the Senate.

6. January 4 and beyond. That's when the new Congress gets organized, with many committees facing new leadership and with new members anxious to make their marks. The main consequence for economic policy questions is the greater unpredictability of congressional institutions.

7. January 20. Not really a legal deadline, since President Obama has been elected to a second term. He does have to take the oath of office two more times, however, once on Sunday, the 20th, and then again Monday, the 21st in the public ceremony at the Capitol.

8. March 27. That's the day the Continuing Appropriations law expires. Agencies will lose their spending authority. Unless superseded by particular appropriations bills, or extended, perhaps even for the rest of the fiscal year, which ends September 30, the U.S. government will have to halt all but emergency operations.

These various dates provide incentives and hurdles for lawmakers to develop and enact whatever measures they try in order to back away from the fiscal cliff. The terrain is tough any time, but particularly treacherous given current political polarization.