News / USA

Obama, Congress Face Budget Showdown

Cindy Saine
Newly re-elected President Barack Obama appears to be headed toward another clash over taxes and government spending with the House of Representatives, where Republicans held on to their majority after the election and Democrats expanded their majority in the Senate. 

In grueling negotiations on the level of government spending, taxes and how to reduce the national deficit, House Republicans have refused to consider any tax increases for anyone.  Democrats have insisted that if they agree to cuts in government programs they strongly support, Republicans need to give in and let taxes increase for the wealthiest Americans. 


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.
With the elections over, President Obama has invited congressional leaders to the White House to start negotiating a deal to prevent sharp tax increases and spending cuts - often referred to as the "fiscal cliff" - and says that he is open to compromise on the stubborn fiscal issues that have paralyzed Washington.  But he also made clear that Republicans are going to have accept tax increases for top earners or expect a presidential veto.

"But, I refuse to accept any approach this is not balanced," he said.  "I am not going to ask students and seniors and middle class families to pay down the entire deficit while people like me making over $250,000 are not asked to pay a dime [10 cents] more in taxes.  I am not going to do that."

Tax burden

For his part, Republican House Speaker John Boehner also said he hopes productive conversations begin soon with the White house, but again drew a line at the issue of higher taxes for Americans earning the highest incomes.

House Speaker John Boehner (R-OH)House Speaker John Boehner (R-OH)
x
House Speaker John Boehner (R-OH)
House Speaker John Boehner (R-OH)
"The Number One issue in the election was about the economy and jobs," he said. "Everyone wants to get our economy moving again, everyone wants to get more Americans back to work again.  Raising tax rates will slow down our ability to create the jobs that everyone says they want."

On the tax issue, analysts point out that the cuts passed under former President George W. Bush are set to expire at the end of this year unless the president signs an extension, so the burden is on Republicans to seek a deal.  Ronald Brownstein, editorial director of the National Journal, says Speaker Boehner does not seem to realize that he can no longer refuse to cooperate.

"With all due respect, it is not really his choice anymore," he said. "What is different about this environment is that the Bush tax cuts will expire and will revert to the rates under [former president Bill] Clinton for everybody unless President Obama signs an extension, and after this campaign that would be pretty shocking."

Avoiding "fiscal cliff"

Former U.S. secretary of agriculture and former Democratic congressman Dan Glickman says he is optimistic that Congress and the president will take action over the next 45 days to avoid going over the "fiscal cliff."

"But since we have a reelected president, I am hopeful that they can work out some sort of a deal," he said. "I suspect that it will be a short-term deal rather than a long-term deal to get us over this imminent cliff or crisis, so that we can go into next year with a little more time to think through these things.  But that way, I think the markets will be fairly calm and there will not be people thinking the United States cannot get its act together at all."

David Wasserman, an analyst with the Cook Political Report, says the chances are better for the current Congress to tackle budget challenges than the newly-elected Congress, which he says is likely to be even more polarized, and with even fewer members who call themselves moderates.

"I have been warning people that it is going to be harder to get something big passed when Congress is sworn in in January than it is in these next 45 days, because we have so many people who do have an incentive to reach across the aisle who are leaving after January," he said.

Sequestration threat

Analysts point out that the president and Congress also agreed more than a year ago on a mechanism known as sequestration - severe across the board cuts on government programs, including defense spending.  They would automatically take effect in January 2013 unless the Democratic-controlled Senate and the Republican-controlled House reach an agreement on taxes and spending. 

Neither Democrats nor Republicans wants those dramatic spending cuts, so that may give them the incentive they need to try to find common ground with President Obama when they are meeting with him at the White House.

You May Like

On Everest, Helicopters Rescue Stranded Climbers

Choppers transport some of more than 100 mountaineers trapped after deadly quake, avalanches More

Video Ten Years After Riots, France Searches for Answers to Neglected Suburbs

In 2005, a Paris suburb exploded into violence after two teenagers were electrocuted as they hid from police; since then, somethings have changed, others not More

US, Japan Announce Historic Revision of Defense Cooperation Guidelines

Nations say new guidelines will be 'cornerstone for peace and security' in Asia-Pacific region while also serving as 'platform for a more stable international security environment' More

This forum has been closed.
Comment Sorting
Comments
     
by: Anonymous
November 13, 2012 12:09 PM
I need the compromise measure to bolster the economy !!!to avoid the meltdown.

by: Brandt Hardin
November 12, 2012 8:45 PM
Will we ever see bipartisan politics in our country again? The fringe element within the Republican Party has pushed them all to the far right of the isle where they’ve gridlocked our government for two years now. Will the next two be any different? They’ve been very public about their main goal being to block and bamboozle the President’s every move. It takes many hands to paint the Blackface on Obama. See my visual report of his makeup session at http://dregstudiosart.blogspot.com/2012/10/bamboozling-obama.html

by: Anonymous
November 12, 2012 2:53 PM
increase income and deduct spending, helpful to U.S.

by: Mike_LV from: Las Vegas
November 12, 2012 11:14 AM
Well at least if Congress does the usual...i.e. nothing, at least we'll have some plan for deficit reduction. Even if it sends us back to recession, we'll be spending less right?

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
‘Angel of the Migrants’ Helps Desperate Syrians Arriving in Europei
X
Henry Ridgwell
April 26, 2015 10:36 PM
Waves of migrants are continuing to arrive on the shores of southern Italy from North Africa. After their dangerous journey across the Mediterranean, they face an unknown future in Europe. In the Sicilian city of Catania there is an activist dedicated to helping the refugees on their journey.
Video

Video ‘Angel of the Migrants’ Helps Desperate Syrians Arriving in Europe

Waves of migrants are continuing to arrive on the shores of southern Italy from North Africa. After their dangerous journey across the Mediterranean, they face an unknown future in Europe. In the Sicilian city of Catania there is an activist dedicated to helping the refugees on their journey.
Video

Video Ten Years After Riots, France Searches for Answers to Neglected Suburbs

January’s terrorist attacks and fears of more to come are casting a spotlight on France’s neglected suburbs. Home to many immigrants, and sometimes hubs of crime, they were rocked by rioting a decade ago. Lisa Bryant visited the Paris suburb of Clichy-sous-Bois, where the 2005 violence first broke out, and has this report about what has changed and what has not.
Video

Video Gay Marriage Goes Before US Supreme Court

This week, the U.S. Supreme Court will hear arguments on whether gay people have a constitutional right to marriage. VOA’s Michael Bowman reports, the case could lead to the nationwide legalization of same-sex marriage, or a continuation of the status quo in which individual states decide whether to recognize gay unions.
Video

Video Study: Insecticide Damaging Wild Bee Populations

A popular but controversial type of insecticide is damaging important wild bee populations, according to a new study. VOA’s Steve Baragona has more.
Video

Video Data Servers Could Heat Private Homes

As every computer owner knows, when their machines run a complex program they get pretty hot. In fact, cooling the processors can be expensive, especially when you're dealing with huge banks of computer servers. But what if that energy could heat private homes? VOA’s George Putic reports that a Dutch energy firm aims to do just that.
Video

Video Cinema That Crosses Borders Showcased at Tribeca Film Festival

Among the nearly 100 feature length films being shown at this year’s Tribeca Film Festival in New York City are more than 20 documentaries and features with international appeal, from a film about a Congolese businessman in China, to documentaries shot in Pakistan and diaspora communities in the U.S., to a poetic look at disaffected South African youth. VOA’s Carolyn Weaver has more.
Video

Video UN Confronts Threat of Young Radicals

The radicalization and recruitment of young people into Islamist extremist groups has become a growing challenge for governments worldwide. On Thursday, the U.N. Security Council heard from experts on the issue, which has become a potent threat to international peace and security. VOA’s Margaret Besheer reports.
Video

Video Growing Numbers of Turks Discover Armenian Ancestry

In a climate of improved tolerance, growing numbers of people in Turkey are discovering their grandmothers were Armenian. Hundreds of thousands of Armenians escaped the mass deportations and slaughter of the early 1900's by forced conversion to Islam. Or, Armenian children were taken in by Turkish families and assimilated. Now their stories are increasingly being heard. Dorian Jones reports from Istanbul that the revelations are viewed as an important step.
Video

Video Migrants Trek Through Western Balkans to Reach EU

Migrants from Africa and other places are finding different routes into the European Union in search of a better life. The Associated Press followed one clandestine group to document their trek through the western Balkans to Hungary. Zlatica Hoke reports that the migrants started using that route about four years ago. Since then, it has become the second-most popular path into Western Europe, after the option of sailing from North Africa to Italy.
Video

Video US Businesses See Cuba as New Frontier

The Obama administration's opening toward Cuba is giving U.S. companies hope they'll be able to do business in Cuba despite the continuation of the U.S. economic embargo against the communist nation. Some American companies have been able to export some products to Cuba, but the recent lifting of Cuba's terrorism designation could relax other restrictions. As VOA's Daniela Schrier reports, corporate heavy hitters are lining up to head across the Florida Straits - though experts urge caution.
Video

Video Kenya Launches Police Recruitment Drive After Terror Attacks

Kenya launched a major police recruitment drive this week as part of a large-scale effort to boost security following a recent spate of terror attacks. VOA’s Gabe Joselow reports that allegations of corruption in the process are raising old concerns about the integrity of Kenya’s security forces.
Video

Video Japan, China in Race for Asia High-Speed Rail Projects

A lucrative competition is underway in Asia for billions of dollars in high-speed rail projects. Cambodia, India, Indonesia, Malaysia Thailand and Vietnam are among the countries planning to move onto the fast track. They are negotiating with Japan and the upstart Chinese who are locked in a duel to revolutionize transportation across Asia. VOA Correspondent Steve Herman in Bangkok has details.
Video

Video Scientists: Mosquitoes Attracted By Our Genes

Some people always seem to get bitten by mosquitoes more than others. Now, scientists have proved that is really the case - and they say it’s all because of genes. It’s hoped the research might lead to new preventative treatments for diseases like malaria, as Henry Ridgwell reports from London.
Video

Video Bible Museum Coming to Washington DC

Washington is the center of American political power and also home to some of the nation’s most visited museums. A new one that will showcase the Bible has skeptics questioning the motives of its conservative Christian funders. VOA religion correspondent Jerome Socolovsky reports.
Video

Video Afghan First Lady Pledges No Roll Back on Women's Rights

Afghan First Lady Rula Ghani, named one of Time's 100 Most Influential, says women should take part in talks with Taliban. VOA's Rokhsar Azamee has more from Kabul.

VOA Blogs