Now that we know what the fiscal cliff is all about, what are the plans for dealing with it? Below are the four approaches that have been proposed:

The Democrats’ Plan

Treasury Secretary Timothy Geithner offered the White House’s fiscal cliff proposal to Republicans in the last week of November. Although the proposal wasn’t released to the public, news reports say it was basically a reprise of Obama’s most recent budget request and contained the following items:

• End the Bush tax cuts for those making more than $250,000. The result would be $1.6 trillion in new taxes over 10 years, $160 billion a year.
• Cuts to Medicare and other entitlements over 10 years equal to $400 million, or $40 million a year.
• Additional stimulus spending of $50 billion.
• Authority to allow President Obama to to raise the debt limit without asking Congress in order to prevent “fiscal cliff”-style triggers from being put in place in the future.
• The White House also counts “savings from ending the wars in Iraq and Afghanistan” in their savings tally, even though no one has proposed maintaining war spending over the next decade at the current rate.

Reception: The Republicans rejected Obama’s plan but offered to let it be voted on in the Senate. However, yesterday Senate Majority Leader Harry Reid (D-Nev.) blocked a vote on the president’s proposal.

The Republicans’ Plan

Earlier this week, House Speaker John A. Boehner (R-Ohio) and other senior Republicans suggested that a framework laid out by Democrat Erskine Bowles be used as the basis of a plan:

•Raise $800 billion ($80 billion a year) in tax revenue by removing specific existing deductions from the tax code.
•Cutting $600 billion ($60 billion a year) from federal health programs, in part by increasing the Medicare eligibility age from 65 to 67.
•Cutting federal agency budgets by $300 billion over ten years ($30 billion a year).
•Saving $200 billion ($20 billion a year) by applying a less generous measure of inflation to all federal programs, including Social Security benefits, which would slow the growth of those programs.

Reception: Obama refuses to negotiate on this plan unless Republicans agree to accept income tax hikes on those making $250,000 or more a year.

The Republican Doomsday Plan

Recognizing that they are unable to come to an agreement with the president, some House Republicans are considering a Doomsday Plan:

•Allow a vote on extending the Bush middle class tax cuts (the bill passed in August by the Senate).
•To express disapproval at the failure to extend all tax cuts, Republicans would vote “present” on the bill, allowing it to pass entirely on Democratic votes.

Reception: President Obama has said he will reject this option too, implying that he would veto such legislation.

The ‘Let’s Go Off the Cliff’ Plan

The simplest—and increasingly most likely—option would be for Congress and the White House to take no legislative action before January. Taxes would go up and spending would be cut and then . . .

Reception: We may soon find out.