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Major clash nearing over taxes, spending cut

T.J. Kirkpatrick/Getty Images Sen. Kent Conrad, D-N.D., said both parties need to work together to find a compromise on the budget showdown.

A budget showdown for the ages could begin after this year's election and stretch well into 2013 -- despite the threat that an impending half-trillion-dollar avalanche of tax increases and spending cuts might rekindle a national recession.

The reason: an unprecedented collision of high-stakes fiscal decisions, coming at a time of intense partisanship, a teetering economy, record federal deficits and, possibly, a new president.

Campaigning for the White House and Congress will make substantive action all but impossible before the elections. And agreement may be nearly as tough during a post-election, lame duck session in November and December, barring a European financial meltdown or Middle East oil supply crisis that demands an immediate response by lawmakers.

"I don't know how a Congress that can't agree on anything in two years is all of a sudden going to come together with the administration in the last 45 days of the year to solve the problem," said Rep. Steven LaTourette, R-Ohio.

No one can confidently predict the outcome of the battle over what many are calling the "fiscal cliff." Much depends on whether President Obama defeats Republican challenger Mitt Romney in November and which party controls Congress.

If Romney wins, Republicans will want to delay decisions until he takes office in January. In that case, a lame duck session would focus on postponing the spending cuts and extending current tax rates for six months to a year.

If Obama is re-elected, the fight could easily stretch into 2013 due to the complex issues and the parties' deep differences.

When political and economic stakes reach these levels, the solution almost always comes from party leaders and the White House. Many in Washington expect that to be true this time as well.

Even so, bipartisan groups of senators are seeking middle ground, meeting in a Washington town house, a restaurant and discreet Capitol hideaways. A common starting point has been a debt-reduction plan by a 2010 commission headed by Democrat Erskine Bowles and Republican Alan Simpson.

"If there's any chance to do something either before the election or after the election, somebody has got to have done the homework," said Senate Budget Committee Chairman Kent Conrad, D-N.D., a leader of one bipartisan group of senators.