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

    Escalation of Media Crackdown in Turkey Heightens Concerns

    Critics see 'a new dark age' as arrests of journalists, closures of media outlets by Erdogan government mount

    Russia Boasts of Troop Buildup on Flank, Draws Flak

    Russian military moves counter to efforts to de-escalate tensions, State Department says

    Video Iraqis Primed to March on Mosul, Foreign Minister Says

    Iraqi FM Ibrahim al-Jaafari tells VOA the campaign will meet optimistic expectations, even though US officials remain cautious

    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.
    Immigrant Delegate Marvels at Democratic Processi
    X
    Katherine Gypson
    July 27, 2016 6:21 PM
    It’s been a bitter and divisive election season – but first time Indian-American delegate Dr. Shashi Gupta headed to the Democratic National Convention with a sense of hope. VOA’s Katherine Gypson followed this immigrant with the love of U.S. politics all the way to Philadelphia.
    Video

    Video Immigrant Delegate Marvels at Democratic Process

    It’s been a bitter and divisive election season – but first time Indian-American delegate Dr. Shashi Gupta headed to the Democratic National Convention with a sense of hope. VOA’s Katherine Gypson followed this immigrant with the love of U.S. politics all the way to Philadelphia.
    Video

    Video A Life of Fighting Back: Hillary Clinton Shatters Glass Ceiling

    Hillary Clinton made history Thursday, overcoming personal and political setbacks to become the first woman to win the presidential nomination of a major U.S. political party. If she wins in November, she will go from “first lady” to U.S. Senator from New York, to Secretary of State, to “Madam President.” Polls show Clinton is both beloved and despised. White House Correspondent Cindy Saine takes a look at the life of the woman both supporters and detractors agree is a fighter for the ages.
    Video

    Video Dutch Entrepreneurs Turn Rainwater Into Beer

    June has been recorded as one of the wettest months in more than a century in many parts of Europe. To a group of entrepreneurs in Amsterdam the rain came as a blessing, as they used the extra water to brew beer. Serginho Roosblad has more to the story.
    Video

    Video First Time Delegate’s First Day Frustrations

    With thousands of people filling the streets of Philadelphia, Pennsylvania for the 2016 Democratic National Convention, VOA’s Kane Farabaugh narrowed in on one delegate as she made her first trip to a national party convention. It was a day that was anything but routine for this United States military veteran.
    Video

    Video Commerce Thrives on US-Mexico Border

    At the Democratic Convention in Philadelphia this week, the party’s presumptive presidential nominee, Hillary Clinton, is expected to attack proposals made by her opponent, Republican presidential nominee Donald Trump, to build a wall along the U.S.-Mexico border. Last Friday, President Barack Obama hosted his Mexican counterpart, President Enrique Peña Nieto, to underscore the good relations between the two countries. VOA’s Greg Flakus reports from Tucson.
    Video

    Video Film Helps Save Ethiopian Children Thought to be Cursed

    'Omo Child' looks at effort of African man to stop killings of ‘mingi’ children
    Video

    Video London’s Financial Crown at Risk as Rivals Eye Brexit Opportunities

    By most measures, London rivals New York as the only true global financial center. But Britain’s vote to leave the European Union – so-called ‘Brexit’ – means the city could lose its right to sell services tariff-free across the bloc, risking its position as Europe’s financial headquarters. Already some banks have said they may shift operations to the mainland. Henry Ridgwell reports from London.
    Video

    Video Recycling Lifeline for Lebanon’s Last Glassblowers

    In a small Lebanese coastal town, one family is preserving a craft that stretches back millennia. The art of glass blowing was developed by Phoenicians in the region, and the Khalifehs say they are the only ones keeping the skill alive in Lebanon. But despite teaming up with an eco-entrepreneur and receiving an unexpected boost from the country’s recent trash crisis the future remains uncertain. John Owens reports from Sarafand.
    Video

    Video Migrants Continue to Risk Lives Crossing US Border from Mexico

    In his speech Thursday before the Republican National Convention, the party’s presidential candidate, Donald Trump, reiterated his proposal to build a wall along the U.S.-Mexico border if elected. Polls show a large percentage of Americans support better control of the nation's southwestern border, but as VOA’s Greg Flakus reports from the border town of Nogales in the Mexican state of Sonora, the situation faced by people trying to cross the border is already daunting.
    Video

    Video In State of Emergency, Turkey’s Erdogan Focuses on Spiritual Movement

    The state of emergency that Turkish President Recep Tayyip Erdogan has declared is giving him even more power to expand a purge that has seen an estimated 60,000 people either arrested or suspended from their jobs. VOA Europe correspondent Luis Ramirez reports from Istanbul.
    Video

    Video Calm the Waters: US Doubles Down Diplomatic Efforts in ASEAN Meetings

    The United States is redoubling diplomatic efforts and looking to upcoming regional meetings to calm the waters after an international tribunal invalidated the legal basis of Beijing's extensive claims in the South China Sea. VOA State Department correspondent Nike Ching has the story.
    Video

    Video Scientists in Poland Race to Save Honeybees

    Honeybees are in danger worldwide. Causes of what's known as colony collapse disorder range from pesticides and loss of habitat to infections. But scientists in Poland say they are on track to finding a cure for one of the diseases. VOA’s George Putic reports.

    Special Report

    Adrift The Invisible African Diaspora

    World Currencies

    EUR
    USD
    0.9098
    JPY
    USD
    105.75
    GBP
    USD
    0.7631
    CAD
    USD
    1.3189
    INR
    USD
    67.209

    Rates may not be current.