In the mail: Red Ink: Inside the High-Stakes Politics of the Federal Budget by David Wessel.

New York Times: “Senate Democrats — holding firm against extending tax cuts for the rich — are proposing a novel way to circumvent the Republican pledge not to vote for any tax increase: Allow all the tax cuts to expire Jan. 1, then vote on a tax cut for the middle class shortly thereafter.”

“The proposal illustrates the lengths lawmakers are going to in an effort to include new federal revenues in a fix for the ‘fiscal cliff,’ the reckoning in January that would come when all Bush-era tax cuts expire and automatic spending cuts to military and domestic programs kick in.”

Bloomberg: The perils of the coming U.S. fiscal cliff.

A new Pew Research poll finds that by two-to-one (44% to 22%), the public says that raising taxes on incomes above $250,00o would help the economy rather than hurt it, while 24% say this would not make a difference.

Moreover, an identical percentage (44%) says a tax increase on higher incomes would make the tax system more fair, while just 21% say it would make the system less fair.

Democrats are “making increasingly explicit threats about their willingness to let nearly $600 billion worth of tax hikes and spending cuts take effect in January unless Republicans drop their opposition to higher taxes for the nation’s wealthiest households,” the Washington Post reports.

“Emboldened by signs that GOP resistance to new taxes may be weakening, senior Democrats say they are prepared to weather a fiscal event that could plunge the nation back into recession if the new year arrives without an acceptable compromise.”

Politico: “The Democratic hard line — asserted by Obama at a private Oval Office meeting with senior party leaders last week — is based squarely on the belief that Republicans will cave on taxes because the GOP has far less leverage than it did after its resounding success in the 2010 elections.”

Wonk Wire: It’s time for workable solutions for the fiscal cliff.

“The rigidity of those pledges is something I don’t like. The circumstances change and you can’t be wedded to some formula by Grover Norquist. It’s — who the hell is Grover Norquist, anyway?”

— Former President George H.W. Bush, in an interview in Parade, on Grover Norquist’s “no new tax” pledge.

A new United Technologies/National Journal Poll shows that only 26% of the public wants to see all of the Bush tax breaks extended for at least another year. And only 18% want the tax breaks across all income levels made permanent, the position taken by Mitt Romney. 

Former White House chief of staff Erskine Bowles and former Sen. Alan Simpson “are working with a bipartisan group of 47 Senators and as many House members to frame a compromise on $7 trillion in looming fiscal decisions,” Reuters reports.

“Without a deal, the end of the year brings higher taxes for most Americans with the expiration of historically low income tax rates enjoyed by nearly every American and expiry of a payroll tax break, along with broad automatic spending cuts that most lawmakers in both parties want to avoid.”

Said Bowles: “I believe this group will come together during the lame duck.”

House Republican leaders “unveiled a legislative calendar for the summer, revealing plans to hammer President Obama and Democrats on the economy, energy, taxes and other divisive issues in the months leading up to November’s elections,” The Hill reports.

The schedule includes a July vote to extend the Bush-era tax rates for all Americans.

“Do not buy into the BS that you hear.”

— White House press secretary Jay Carney, quoted by The Hill, saying it was “a sign of sloth and laziness” that reporters bought into the GOP idea that federal spending increased dramatically under President Obama.

Wonk Wire: The spending spree that never happened.

In the mail: It’s Even Worse Than it Looks by Thomas Mann and Norman Ornstein.

The book identifies the two scourges most responsible for our dysfunctional government: the polarization between two adversarial political parties and a governing system that makes it very difficult for majorities to act. This is coupled with an “escalating extremism” of the Republican party.

Perhaps most important, the authors note that several popular “cures” for our nation’s problems — a balanced budget amendment and term limits — would only exacerbate the gridlock.

A must-read from Matt Bai:

“The Republican version of reality goes, briefly, like this: Boehner and Obama shook hands on a far-reaching deal to rewrite the tax code, roll back the cost of entitlements and slash deficits. But then Obama, reacting to pressure from Democrats in Congress, panicked at the last minute and suddenly demanded that Republicans accede to hundreds of billions of dollars in additional tax revenue. A frustrated Boehner no longer believed he could trust the president’s word, and he walked away. Obama moved the goal posts, is the Republican mantra.”

“In recent weeks, as it became clear that I was planning to write a more nuanced and detailed account of the final week of negotiations, both sides — but primarily the speaker and his aides — went out of their way to give extensive accounts to reporters at other outlets, in an effort to reinforce their well-rehearsed narratives. And yet it’s possible now to get beyond these clashing realities.”

Politico: “The Paul Ryan budget was a political disaster last year for Republicans. This year the GOP had a much more methodical, careful rollout. The party polled on Medicare in 50 battleground districts. It vetted the plan with a dozen conservative groups. It reached out to rank-and-file lawmakers and asked them what they needed to support the sweeping conservative spending plan. Ryan briefed the Republican presidential candidates and won a quick public endorsement of the plan from Mitt Romney. And perhaps most important, the GOP learned how to use the right poll-tested words.”

The national debt has now increased more during President Obama’s three years and two months in office than it did during 8 years of the George W. Bush presidency, CBS News reports.

“If Mr. Obama wins re-election, and his budget projections prove accurate, the National Debt will top $20 trillion in 2016, the final year of his second term. That would mean the Debt increased by 87 percent, or $9.34 trillion, during his two terms.”

Must-read piece in the Washington Post:

“Last summer’s effort at a “grand bargain” on the debt, described by White House officials as the most consequential of Obama’s presidency, illuminated pitfalls in the road he had taken and directed him down a partisan path now defining the reelection campaign.”

Federal Reserve Chairman Ben Bernanke warned Congress it risked taking the nation over a “massive fiscal cliff” at the end of the year, The Hill reports.

He warned expiring tax cuts and spending cuts set to be triggered at the end of the year could hurt the economic recovery.

Said Bernanke: “All those things are hitting on the same day, basically. It’s quite a big event.”

“This year’s lame-duck session of Congress is expected to be one of the busiest in history given the expiring tax cuts and the spending cuts, which were triggered by the supercommittee’s failure last year to agree to a deficit-cutting plan. Congress will also need to raise the debt ceiling quickly after Election Day.”

“You know, it’s sort of a touching response to a $1.2 trillion deficit, isn’t it, that somehow the American people will just all send in checks and take care of it.”

— Warren Buffett, in an interview with CNBC, responding to New Jersey Gov. Chris Christie (R) who told him he should “write a check and shut up” if he’s so intent on raising taxes on wealthy Americans in order to reduce the deficit.

The payroll tax extension that Congress passed last week “accelerated the timeline for another battle over the debt ceiling,” The Hill reports.

“The debt-ceiling agreement lawmakers approved in August established a cooling-off period, with enough borrowing to see the country through until after the November election. But a sequel to the debt-ceiling drama could be coming to Washington sooner than planned, thanks to the billions of dollars in deficit spending in the payroll tax agreement.”

“This is an economic relief bill – not a growth bill. The only reason the
provisions at the core of this measure are even necessary is because
the President’s economic policies have failed.”

— House Speaker John Boehner, in a statement on passing an extension of the payroll tax cut.