Bloomberg News

What Holiday? Fiscal Talks a Grinch From K Street to Wall Street

December 14, 2012

What Holiday? Budget Deadlock Is Grinch From K St. to Wall St.

The Capitol Christmas Tree is seen on the West Front Lawn of the U.S. Capitol. White House and congressional officials warned their staffs that they may be spending the holidays at their desks in Washington, as both sides publicly refused to budge from their positions on taxes and spending. Photo: Alex Wong/Getty Images

Tim Delaney had hoped to see family in Texas and Arizona for the holidays. Now, the chief executive officer of the National Council of Nonprofits is stuck in Washington because of a deadlock in U.S. budget negotiations.

“Holiday? Really?” said Delaney, who needs to keep his members informed as Congress and the White House approach a Dec. 31 deadline to avoid a combination of expiring Bush-era tax breaks and automatic spending cuts.

The stalemate has disrupted the holidays for industry representatives, attorneys, financial analysts, lobbyists and others who must keep tabs on the talks. They are holding back on vacations, working through them or being put on call.

“Nobody knows what Congress will or will not be doing,” Delaney said in a telephone interview. “Historically, they’ve not met on Christmas Eve. But if they do, I will be here. If they don’t, I will still be here, monitoring what’s going on.”

Richard Whittington, an analyst at Drexel Hamilton LLC in New York, said he still plans to take a holiday ski trip to Colorado. The budget impasse may limit his time on the slopes.

“We’ve got a federal budget showdown that’s very high- stakes poker,” Whittington said in a telephone interview. “The outcome is going to have a material bearing on defense stocks come January, one way or the other.”

Watching C-SPAN

Brian Ruttenbur, an analyst at CRT Capital Group LLC, said he plans to spend a good portion of the holidays in his home office, watching C-SPAN to keep an eye on the budget debate. He lives with his wife and their eight children in Nashville, Tennessee.

An associate who normally takes time off around the holidays will be working instead at the company’s headquarters in Stamford, Connecticut, so they’re ready when trading resumes on Jan. 2, Ruttenbur said.

“I have to prepare for the first day of markets to write a note saying either we’ve gone over the cliff or we haven’t,” he said, referring to what has become known as the fiscal cliff. “That’s why I’m watching.”

Washington’s lobbying shops, known collectively as K Street, where many of them were once located, also are watching. Dan Tate, a lobbyist at Forbes-Tate LLC, said his office would normally be shut for the week between Christmas and New Year’s. With the negotiations continuing, the firm’s lobbyists may have to work, he said.

“This time, we have to assess where everybody is to make sure we have enough people to cover in case anything happens,” Tate said.

Online Shopping

Forbes-Tate represents Comcast Corp. (CMCSA:US), Honda Motor Co. (HMC:US)’s U.S. unit, and a utility group that includes American Electric Power Co. (AEP:US) and Duke Energy Corp. (DUK:US) Tate said he “can’t think of a single client that doesn’t care” about the outcome of the budget talks.

Trust and estate lawyers have been especially busy as their clients prepare for current exemptions on gifts and estates to expire at the year’s end.

People who were waiting to see if lawmakers would extend current levels are now deciding to act, said Bobbi Bierhals, a partner and estate planning attorney at McDermott Will & Emery LLP in Chicago.

For Bierhals, the last-minute rush means that holiday planning has taken a back seat. So far, the only shopping she’s been able to do has been online.

“I don’t recall the last time I left the office before 9 p.m.,” she said. “I’m just appreciative of my husband who has managed all of our holiday obligations thus far.”

Ladies Bathroom

Bierhals said she’s seen little of her children, ages 1 and 3. On Dec. 11, she didn’t see them in the morning or the evening. “I didn’t see them at all,” she said.

The combination of more than $600 billion in tax increases and automatic spending cuts is scheduled to take effect in January unless President Barack Obama and Congress delay them or reach an alternate agreement. The tax increases include the expiring income-tax breaks along with new taxes from the 2010 health care law.

The White House and lawmakers have warned their staffs that they might be spending the holidays in Washington, as both sides publicly refused to budge from their positions on taxes and spending.

The standoff was spoofed over the weekend by NBC’s “Saturday Night Live.” House Speaker John Boehner, portrayed by SNL’s Bill Hader, was in tears after being bullied by Republican lawmakers who pelted him with rotten eggs and pushed him into the congressional ladies bathroom.

Refundable Tickets

In reality, Boehner told Republican lawmakers in a closed- door meeting Dec. 12 that votes may come in the final days of December, warning them not to leave Washington for an extended period.

“I just told my family that we needed to prepare that there’s a small chance that I’ll be here for Christmas,” said Idaho Republican Raul Labrador, who flies between Washington and Boise.

White House officials urged staff to buy refundable tickets home. Walking across Pennsylvania Avenue to Blair House for a National Security Council holiday party yesterday, Obama waved, smiled and largely ignored shouted questions from reporters about whether he’d have a new offer or if he thought there would be a deal by Christmas.

The negotiations were “still a work in progress,” Obama told the journalists, who are seeing their holiday plans threatened as well.

Some have vented their frustrations in haiku, using a Twitter hashtag called #fiscalcliffhaikus.

Herb Jackson, Washington correspondent for Bergen County, New Jersey’s The Record, wrote: “Vacation unused / Not able to schedule / G’damn fiscal cliff.”

To contact the reporters on this story: Brendan McGarry in Washington at bmcgarry2@bloomberg.net; Danielle Ivory in Washington at divory@bloomberg.net

To contact the editor responsible for this story: Stephanie Stoughton at sstoughton@bloomberg.net


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