News / Economy

Obama, Congressional Leaders Have Days to Craft Fiscal Deal

Obama Cuts Vacation Short as Fiscal Cliff Deadline Loomsi
X
December 27, 2012 12:41 AM
President Barack Obama and members of Congress are cutting their holiday breaks short, returning to Washington to resume negotiations aimed at avoiding a looming fiscal crisis. With just days to go before the so-called "fiscal cliff," many worry the political one-upmanship is already causing harm to the US economy. Mil Arcega has more.
Watch a Related Report by Mil Arcega
U.S. President Barack Obama returns to Washington Thursday to resume difficult negotiations with congressional leaders to avert or postpone tax increases and mandatory government spending cuts at the end of the year.

Curtailing what was to have been a two-week vacation with his family in Hawaii, Obama will assess progress made by lawmakers and his own aides toward achieving this goal he set last Friday.

"To work towards a package that prevents a tax hike on middle class Americans, protects unemployment insurance for 2 million Americans, and lays the groundwork for further work on both growth and deficit reduction." Obama said.

The president has said he remained hopeful about the possibility of achieving a larger comprehensive deficit reduction package.  But chances for this appear exceedingly slim.

That leaves the most likely scenario:  a measure in the Democratic-controlled Senate to extend tax cuts for families earning $250,000 or less, adding extended benefits for unemployed Americans, and a mechanism to temporarily avoid $109 billion in government spending cuts.

Any Senate-passed measure would have to win the support of at least 26 Republicans and all 191 Democrats in the House of Representatives.  House Speaker John Boehner faced a rebellion last week by anti-tax Republicans who blocked his alternative plan to raise taxes on Americans earning $1 million or more.

In a statement Wednesday, Boehner said it is up to the Senate to act, adding that "lines of communication" remain open.

Stephen Hess, an analyst with the Brookings Institution, says he believes a deal will emerge.

"Something is bound to go through.  The Congress may have awful problems, but they are not going to set off a recession, which is what would happen if they couldn't reach agreement on taxes, and also on the huge cuts that are guaranteed to start immediately with the new year as well," Hess said.

An alternative scenario would have lawmakers return in January to reverse tax increases and further delay mandatory government spending cuts.  Republicans could then say they voted only to decrease tax rates.

Without a deal, tax cuts approved by Congress under former Republican President George W. Bush -- which were temporarily extended in 2010 by President Obama -- would expire January 1.  

Hess observes that so far, financial markets have been remarkably quiet as politicians struggle to forge a deal.

"There has been a wait and see attitude in the markets.  It has been a year, 2012,  in which generally the American markets have done well, so there is a little wiggle room there, and they have not chosen to follow th­e politicians over the cliff -- yet," Hess said.

Princeton University economist Alan Blinder is concerned about the impact on the U.S. economy when leaders are unable to reach a compromise.

"An economy which was just limping out of the worst recession since the 1930's, then gets another body blow, sees its government act like a bunch of clowns, may see borrowing costs go up because of lack of confidence in the financial markets," Blinder said.

According to a recent poll, Americans watching the Washington power struggle play out are more pessimistic than they were about chances for a deal.

A Gallup Poll conducted before Christmas showed just 50 percent believe a deal to avert the fiscal cliff is likely, a sharp decrease from several weeks ago.  Forty-eight percent said they were doubtful an agreement can be reached.

You May Like

Russia Names US NGO 'Undesirable'

Prosecutors determine activities of National Endowment for Democracy to be 'undesirable,' paving the way for it to be outlawed on Russian territory More

Erdogan Vows 'Anti-Terror' Campaign in Syria, Iraq

Erdogan expressed confidence the 'necessary steps' will be taken by NATO leaders, who will meet Tuesday at Turkey's request More

North Korea: 'No Interest at All' in Nuke Deal

Senior US envoy Sydney Seiler visits Beijing Tuesday for talks on how to revive the stalled six-party nuclear talks with North Korea More

This forum has been closed.
Comments
     
There are no comments in this forum. Be first and add one

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
US Calls Fight Against Human Trafficking a Must Wini
X
July 28, 2015 12:21 AM
The United States is promising not to give up its fight against what Secretary of State John Kerry calls the “scourge” of modern slavery. Officials released the country’s annual human trafficking report Monday – a report that’s being met with some criticism. VOA’s National Security correspondent Jeff Seldin has more from the State Department.
Video

Video US Calls Fight Against Human Trafficking a Must Win

The United States is promising not to give up its fight against what Secretary of State John Kerry calls the “scourge” of modern slavery. Officials released the country’s annual human trafficking report Monday – a report that’s being met with some criticism. VOA’s National Security correspondent Jeff Seldin has more from the State Department.
Video

Video Iran Nuclear Pact Wins Few New US Congressional Backers

Later this week, President Barack Obama returns from a trip to Africa to confront a U.S. Congress roiled by the nuclear accord with Iran, an agreement that has received the blessing of the U.N. Security Council. Days of intensive lobbying and testimony by top administration officials have won few new congressional supporters of the pact. VOA’s Michael Bowman reports.
Video

Video Washington DC Underground Streetcar Station to Become Arts Venue

Abandoned more than 50 years ago, the underground streetcar station in Washington D.C.’s historic DuPont Circle district is about to be reborn. The plan calls for turning the spacious underground platforms - once meant to be a transportation hub, - into a unique space for art exhibitions, presentations, concerts and even a film set. Roman Mamonov has more from beneath the streets of the U.S. capital. Joy Wagner narrates his report.
Video

Video Obama Encourages Kenya to Fix Cultures of Corruption, Discrimination

President Barack Obama bid farewell to Kenya Sunday with a major speech at as stadium outside the capital Nairobi where he called on Kenyans to change the cultures of corruption and discrimination that can hold society back. VOA East Africa Correspondent Gabe Joselow has the story.
Video

Video Europe’s Twin Crises Collide in Greece as Migrant Numbers Soar

Greece has replaced Italy as the main gateway for migrants into Europe, with more than 100,000 arrivals in the first six months of 2015. Many want to move further into Europe and escape Greece’s economic crisis, but they face widespread dangers on the journey overland through the Balkans. VOA's Henry Ridgwell reports.
Video

Video Stink Intensifies as Lebanon’s Trash Crisis Continues

After the closure of a major rubbish dump a week ago, the streets of Beirut are filling up with trash. Having failed to draw up a plan B, politicians are struggling to deal with the problem. John Owens has more for VOA from Beirut.
Video

Video Paris Rolls Out Blueprint to Fight Climate Change

A U.N. climate conference in December aims to produce an ambitious agreement to fight heat-trapping greenhouse gases. But many local governments are not waiting, and have drafted their own climate action plans. That’s the case with Paris — which is getting special attention, since it’s hosting the climate summit. Lisa Bryant takes a look for VOA at the transformation of the French capital into an eco-city.
Video

Video Racially Diverse Spider-Man Takes Center Stage

Whether it’s in a comic book or on the big screen, fans have always known the man behind the Spider-Man mask as Peter Parker. But that is changing, at least in the comic book world. Marvel Comics announced that a character called Miles Morales will replace Peter Parker as Spider-Man in a new comic book series. He is half Latino, half African American, and he is quite popular among comic book fans. Correspondent Elizabeth Lee reports from Los Angeles.
Video

Video California Towns Welcome Special Olympics Athletes

Cities and towns in Southern California are greeting thousands of athletes who are arriving for Special Olympics, a competition for people with intellectual disabilities. The games will run from July 25th through August 2nd. VOA's Mike O'Sullivan reports from Pasadena, California, where athletes from Namibia, Singapore and Tanzania got a rousing welcome from local residents.
Video

Video Critics of Japan Defense Policy Focus on Okinawa

In Okinawa, many locals have long complained that Tokyo places an unfair burden on the tiny island by locating most of Japan's U.S. military bases there. As Japan's government moves toward strengthening and expanding the country's defense policies, opponents of those plans are joining local protesters in Okinawa, voicing concern about where the country is headed. VOA’s Brian Padden reports from Okinawa.
Video

Video IS Uses Chemical Weapons in Syrian Attack

Islamic State militants have added a new weapon in their arsenal of fear: chemical weapons. VOA Kurdish service reporter Zana Omer was on the scene within hours of a recent attack in Hasakah, Syria, and has details of the subsequent investigation, in this report narrated by Miguel Amaya.
Video

Video Historic Symbol Is Theme of Vibrant New Show

A new exhibit in Washington is paying tribute to the American flag with a wide and eclectic selection of artwork that uses the historic symbol as its central theme. VOA’s Julie Taboh was at the DC Chamber of Commerce for the show’s opening.
Video

Video Hoverbike Flying Toward Reality

Another long-standing dream of many technological inventors is quickly approaching reality: U.S.- and British-based firms are cooperating in the development of an individual flying platform they call a hoverbike. They say it may revolutionize the concept of flying, including in the U.S. military. VOA’s George Putic reports.
Video

Video As Japan Expands Defense Role, Protests Follow

The Japanese government is moving forward with a controversial security bill that would authorize the military to fight abroad for the first time since World War II. Leaders say it is critical to defend against rising threats from China and North Korea. VOA’s Brian Padden reports from Japan on the big changes ahead, and the opposition they are drawing.
Video

Video Replacing Poppies with Coffee in Myanmar

The remote mountains of Myanmar’s Shan state are home to the second-largest opium-producing region in the world. After a drop during the 2000s, production surged in the past eight years to feed an increasing demand for heroin in China. But farmers are now making less on the crop, and the U.N. is hoping many will make the switch to growing coffee. Daniel de Carteret reports for VOA from Taunggyi.

VOA Blogs

World Currencies

EUR
USD
0.9043
JPY
USD
123.19
GBP
USD
0.6445
CAD
USD
1.3030
INR
USD
64.170

Rates may not be current.