WASHINGTON -- Democrats are going all-in in a fiscal game of chicken, saying they'll let everyone's income taxes rise on Jan. 1 and slash defense spending amid 8-plus percent unemployment if Republicans continue to balk at raising taxes just on those making more than $250,000 a year.
The brave face is being adopted as President Barack Obama and Congress come to grips with the possibility that gridlock and stalemate will result in the government careening off a fiscal cliff in January with automatic tax increases, spending cuts and an approaching exhaustion of borrowing ability.
"If we can't get a good deal, a balanced deal that calls on the wealthy to pay their fair share, then I will absolutely continue this debate into 2013 rather than lock in a long-term deal this year that throws middle-class families under the bus," Sen. Patty Murray, D-Wash., said in a speech Monday.
Murray's salvo was the latest in an almost daily back-and-forth between top Republicans and Democrats over the one-two punch facing the economy in January: expiration of the Bush tax cuts and the imposition of $110 billion in automatic spending cuts, half coming from defense.
Senate GOP Leader Mitch McConnell was an architect of the automatic spending cuts, which were designed to prod a deficit-reduction supercommittee to reach an agreement rather than actually take effect. The supercommittee failed, and the idea of automatic cuts is now an unpopular one.
The gamesmanship also includes votes in the Republican-controlled House and Democratic-run Senate over the next two weeks on competing one-year extensions of former President George Bush's 2001 and 2003 tax cuts.
The GOP version extends the full range of the Bush tax cuts.
A plan circulated Monday by Senate Democrats would keep income tax rates where they currently are for families earning below $250,000 a year and individuals making less than $200,000, as Obama has proposed. But the tax cuts enacted a decade ago on income above those limits would expire.