Fiscal Cliff Looming As Year Draws to a Close

Written by: Alan Edwards

With only about 10 hours left before 2013 begins, both houses of Congress tries to negotiate to avoid the fiscal cliff looming larger over the weak economic recovery.

The two main sticking points regarding taxes are how many wealthy households should be taxed starting in 2013 and what the estate tax should be on inheritances, frequently called the death tax. Also in the midst of negotiations today the Republicans attempted to introduce the “chained CPI” as a way to bring Social Security costs under control. While the president has indicated he was willing to consider such a change it was only in the context of a much larger budget deal.

Although House Speaker Harry Reid and Republican Senate Minority Leader Mitch McConnell had set a deadline for 3 PM on Sunday for closing a deal they were unable to do so. While leaving the Capitol shortly after 7 PM McConnell remarked: “we’ve been in discussions all day and they continue. We’ve been trading paper all day and talks continue into the evening.”

While negotiators make clear that they will continue talks through Monday, it’s likely that President Obama will ask Senator Harry Reid to introduce legislation that would passed the Senate and also be passed by the House of Representatives if House Speaker John Boehner allows a vote. It’s felt that such a bill would be carried by all Democrats and a small number of Republicans needed the past.

Republican staffers have said that the chain CPI proposal for Social Security was not a necessity to strike a deal however according to Senator Jeff sessions there is concern over additional spending proposed by the White House:

“The biggest obstacle we face is that President Obama and Majority Leader Reid continue to insist on new taxes that will be used to fund more new spending, not for meaningful deficit reduction.”

Reid indicated that he was glad that the Republicans withdrew their changes regarding Social Security but said, “”there’s still significant distance between the two sides.”

He also indicated that he had a new proposal but would not give details to the press.


Fiscal Cliff Looming As Year Draws to a Close

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