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

Turkey's Erdogan: Women Not Equal to Men

Speaking at conference in Istanbul, President Erdogan says Islam has defined a position for women: motherhood More

Ahead of SAARC Summit, Subdued Expectations

Some regional analysts say distrust between Pakistani, Indian officials has slowed SAARC's progress over the year More

Philippines Leery of Development on Reef Reclamation in S. China Sea

Chinese land reclamation projects in area have been ongoing for years, but new satellite imagery reportedly shows China’s massive construction project 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.
Aung San Suu Kyi: Myanmar Opposition to Keep Pushing for Constitutional Changei
X
November 24, 2014 10:09 PM
Myanmar opposition leader Aung San Suu Kyi says she and her supporters will continue pushing to amend a constitutional clause that bars her from running for president next year. VOA's Than Lwin Htun reports from the capital Naypyitaw in this report narrated by Colin Lovett.
Video

Video Aung San Suu Kyi: Myanmar Opposition to Keep Pushing for Constitutional Change

Myanmar opposition leader Aung San Suu Kyi says she and her supporters will continue pushing to amend a constitutional clause that bars her from running for president next year. VOA's Than Lwin Htun reports from the capital Naypyitaw in this report narrated by Colin Lovett.
Video

Video Mali Attempts to Shut Down Ebola Transmission Chain

Senegal and Nigeria were able to stop small Ebola outbreaks by closely monitoring those who had contact with the sick person and quickly isolating anyone with symptoms. Mali is now scrambling to do the same. VOA’s Anne Look reports from Mali on what the country is doing to shut down the chain of transmission.
Video

Video Ukraine Marks Anniversary of Deadly 1930s Famine

During a commemoration for millions who died of starvation in Ukraine in the early 1930s, President Petro Poroshenko lashed out at Soviet-era totalitarianism for causing the deaths and accused today’s Russian-backed rebels in the east of using similar tactics. VOA’s Daniel Shearf reports from Kyiv.
Video

Video Hong Kong Protests at a Crossroads

New public opinion polls in Hong Kong indicate declining support for pro-democracy demonstrations after weeks of street protests. VOA’s Bill Ide in Guangzhou and Pros Laput in Hong Kong spoke with protesters and observers about whether demonstrators have been too aggressive in pushing for change.
Video

Video US Immigration Relief Imminent for Mixed-Status Families

Tens of thousands of undocumented immigrants in the Washington, D.C., area may benefit from a controversial presidential order announced this week. It's not a path to citizenship, as some activists hoped. But it will allow more immigrants who arrived as children or who have citizen children, to avoid deportation and work legally. VOA's Victoria Macchi talks with one young man who benefited from an earlier presidential order, and whose parents may now benefit after years of living in fear.
Video

Video New Skateboard Defies Gravity

A futuristic dream only a couple of decades ago, the hoverboard – a skateboard that floats above the ground - has finally been made possible. While still not ready for mass production, it promises to become a cool mode of transport... at least over some surfaces. VOA’s George Putic reports.
Video

Video Falling Gas Prices Impact US Oil Extraction

With the price of oil now less than $80 a barrel, motorists throughout the United States are benefiting from gas prices below $3 a gallon. But as VOA’s Kane Farabaugh reports, the decreasing price of petroleum has a downside for the hydraulic fracturing industry in the United States.
Video

Video Tensions Build on Korean Peninsula Amid Military Drills

It has been another tense week on the Korean peninsula as Pyongyang threatened to again test nuclear weapons while the U.S. and South Korean forces held joint military exercises in a show of force. VOA’s Brian Padden reports from the Kunsan Air Base in South Korea.
Video

Video Mama Sarah Obama Honored at UN Women’s Entrepreneurship Day

President Barack Obama's step-grandmother is in the United States to raise money to build a $12 million school and hospital center in Kogelo, Kenya, the birthplace of the president's father, Barack Obama, Sr. She was honored for her decades of work to aid poor Kenyans at a Women's Entrepreneurship Day at the United Nations.
Video

Video Ebola Economic Toll Stirs W. Africa Food Security Concerns

The World Bank said Wednesday that it expects the economic impact of the Ebola outbreak on the sub-Saharan economy to cost somewhere betweenf $3 billion to $4 billion - well below a previously-outlined worst-case scenario of $32 billion. Some economists, however, paint a gloomier picture - warning that the disruption to regional markets and trading is considerable. Henry Ridgwell reports from London.
Video

Video Chaos, Abuse Defy Solution in Libya

The political and security crisis in Libya is deepening, with competing governments and, according to Amnesty International, widespread human rights violations committed with impunity. VOA’s Al Pessin reports from London.
Video

Video US Hosts Record 866,000 Foreign Students

Close to 900,000 international students are studying at American universities and colleges, more than ever before. About half of them come from Asia, mostly China. The United States hosts more foreign students than any other country in the world, and its foreign student population is steadily growing. Zlatica Hoke reports.

All About America

AppleAndroid

World Currencies

EUR
USD
0.8048
JPY
USD
118.04
GBP
USD
0.6382
CAD
USD
1.1270
INR
USD
61.892

Rates may not be current.