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Congress Adjourns for Christmas Without Path Forward to Avert Fiscal Cliff

  • Cindy Saine

U.S. lawmakers are heading home for the Christmas holidays without any agreement or even a clear path forward on a way to avoid a combination of massive tax increases and spending cuts known as the fiscal cliff. The entire process came to a standstill late Thursday, when the Speaker of the House of Representatives, John Boehner, was unable to muster enough votes in his own Republican caucus for a bill that would only have raised taxes on incomes of $1 million a year.

After suffering what most analysts viewed as a humiliating setback to his leadership Thursday, House Speaker Boehner sought to push responsibility onto the president and the Senate, even though the House of Representatives would also have to vote to approve any compromise agreement on taxes and spending.

"So unless the president and Congress take action, tax rates will go up on every American taxpayer, and devastating defense cuts will go into effect in 10 days," he said.

What is the U.S. Fiscal Cliff?

  • An agreement intended to force politicians to compromise and make deals.
  • Without a deal by January 1, 2013, sharp spending cuts would hit military and social programs.
  • Tax hikes also would go into effect.
  • The combination would reduce economic activity, and could boost unemployment and push the nation back into recession.
Crisis negotiations between Boehner and Democratic President Barack Obama were abruptly suspended earlier this week, and Boehner had planned to hold a vote on his own tax plan, "Plan B."

But he conceded that there are some members of his Republican caucus who do not want to be viewed as raising taxes on anyone at all, so he pulled the vote because the bill would not have passed. The vote was seen as symbolic because the Democratic-led Senate would not have even taken it up for debate.

Senate Majority Leader Harry Reid said that Boehner had taken a "battering" by his own caucus, and that he should not try to blame the president or congressional Democrats.

"To blame us for that travesty that took place over there, Mr. President, that is pretty incredible," he said.

Reid called on Boehner to reach across the aisle and let the House vote on a measure Democrats could accept, the president's plan to raise taxes on annual incomes of $400,000 or higher.

"What he should do is allow a vote in the House of Representatives on a bipartisan bill, it will pass," he said.

Democratic House Minority Leader Nancy Pelosi said her caucus members are willing to work with the Speaker and the president to prevent potential damage to middle class families and the U.S. economy if the crisis is not resolved.

"There is very little time left, but there is still a chance," she said. "There is still a chance to reach an agreement that is balanced and that is fair."

Some economists say unless action is taken, the U.S. economy could be plunged back into recession. Martin Feldstein is a professor of economics at Harvard University, and he warned of the impact of the so-called sequester, across the board cuts to government spending that would also hit defense spending.

"Well, one of the things that happens if we go over the cliff is another very substantial reduction in the defense budget, about $50 billion a year, or about 10 percent reduction in the defense budget," he said. "It is not clear exactly how that would effect different tasks, security forces, but it would obviously weaken our ability to play the role in Asia and elsewhere that we are accustomed to."

The fiscal cliff measures are set to take effect January 1, and the newly-elected Congress is scheduled to be sworn in January 3.

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