(CNN) - With a little over three weeks left before the country could tumble over the fiscal cliff, and with a deal between President Barack Obama and House Speaker John Boehner not yet in place, a CNN panel Sunday with Chief Political Correspondent Candy Crowley hashed out what needs to happen for a deal to be reached, and the possible economic effects of heading over the edge.
Moody's Analytics Chief Economist Mark Zandi said on “State of the Union” the initial impact of missing the January 1 deadline would likely not be "a big deal," as taxes may not immediately rise, but by February "things start to get uncomfortable." He noted the February deadline for raising the debt ceiling, saying it would be "cataclysmic" not to do so, and would cause a recession.
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Economist Stephen Moore of The Wall Street Journal said the hold up on reaching a fiscal cliff deal came down to differing views on creating economic growth. Moore said he believed an increase in tax rates would cause a recession, identifying spending cuts as a more helpful option for reducing the federal deficit.
Zandi disagreed, arguing a deal should strike a balanced approach, and include spending cuts, higher tax rates, and tax reform.
Joining Zandi and Moore on the panel were New York Times White House Correspondent Jackie Calmes and CNN Senior Congressional Correspondent Dana Bash.
Calmes identified some movement toward a deal, despite the outward appearance of a stalemate. She cited Rep. Tom Cole (R-Oklahoma), a high-ranking Republican who has publically supported extending Bush-era tax cuts for 98% of Americans while dealing with the top 2% of earners later next year.
“It's hard to think that's not going to be where they end up, so why not make it clean instead of ugly?" Calmes wondered.
Bash agreed, saying Republicans are privately conceding the "politically expedient" thing to do is accept higher tax rates for the top 2%, but at the same time push for tax reform. However, Bash said House Republicans fear the possibility of attracting primary challengers as a result of accepting tax increases.
Moore also predicted taxes on the wealthy would go up and give Obama a "short-term victory," but said spending cuts (the "sequestration" part of the fiscal cliff) would be the main issue and cause "more gridlock."
"I don't see Republicans just walking away and saying, 'Ok, we won't do those spending cuts,’” Moore said, adding he thought Democrats have refused to deal with how to cut entitlement spending.
"We may be here until December 31st,” Moore said.
Bash added on to Moore's claim, saying senior House Democrats are concerned with some of their members’ unwillingness to reform entitlements, including raising the eligibility age for Medicare.
Calmes said Democrats know entitlements have to be on the table – as they were in 2011, when Obama and Boehner’s “grand bargain” included looking at changing the cost of living formula for Social Security and slowing raising the retirement age for Medicare.
“There has got to be a lot of people, Republicans, who wish they had taken the deal,” Calmes said, saying those concessions will be harder for Republicans to secure now since the “left has mobilized, and liberal groups are really active.”
Zandi agreed somewhat, saying Democrats realize entitlements like Medicare will have to be dealt with, calling it an "area of common ground." However, Zandi said Democrats were unwilling to change entitlements structurally, like turning Medicaid into block grants, turning Medicare into a voucher program, and privatizing Social Security.
The panel also looked at the controversial right-to-work bill being considered in Michigan. Moore supported the measure, which would allow workers to choose not to join a labor union, saying it was a "poison pill" for unions and allows Michigan to be more competitive.
Zandi agreed it would lead to more jobs, but added that it would also hurt wage growth. Calmes and Bash pointed out how unions already had to give concessions for the auto bailout a few years ago.
The panel also discussed the resignation this week of Sen. Jim DeMint (R-South Carolina), who announced he was leaving the Senate to head the Heritage Foundation, a conservative think tank.
Bash suggested Senate Minority Leader Mitch McConnell (R-Kentucky) was “not unhappy,” with the departure, as DeMint's strong support for Tea Party candidates in 2010 and 2012 arguably kept Republicans from wining back the Senate, and kept McConnell from being majority leader.
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