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New Fiscal Cliff Situation Is 'Worst-Case Scenario'

Henry Blodget
Thursday, 20 Dec 2012 | 12:23 PM ET

Both sides have given up ground in the "Fiscal Cliff" negotiations in Washington, but the surprise tactic of the Republicans to put forth a "Plan B" has suddenly thrown the whole deal into doubt.

Republican House Speaker John Boehner essentially stormed out of the negotiations a couple of days ago and put forth his own bill, which he refers to as "Plan B." This bill extends the Bush tax cuts for all Americans except those making $1 million or more.

Greg Valliere, the Chief Political Strategist at Potomac Research Group, says the Republican ploy is the "worst case scenario" for the negotiations.

Valliere now thinks it is likely that the "deal" will slip into next year and may not happen as early in January as many people expect.

So, what would finally galvanize Washington lawmakers and get them to do what American citizens elected them to do? (Lead.)

A stock market crash.

If Wall Street finally begins to believe that this isn't just kabuki theater--that our leaders really are incompetent and might drive the country off the cliff--the stock market might drop in anticipation of a coming recession. And this, Valliere says, might suddenly wake up the politicians, who would then begin to worry about getting fired because of the crappy economy.

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