News / USA

US Leaders Facing 'Fiscal Cliff' Decisions

The U.S. Capitol building
The U.S. Capitol building
TEXT SIZE - +
VOA News
U.S. leaders are edging closer to an end-of-the-year "fiscal cliff" - sharp, mandated government spending cuts and tax increases for most American workers that could plunge the country into another recession if a compromise is not reached.

Congressional leaders continued to work Sunday to negotiate a pact that would keep tax rates at their current level for all but the wealthiest wage earners, rather than have them revert on New Year's Day to much higher levels set in the 1990s.

Both the Senate and House scheduled unusual Sunday sessions to vote on any compromise legislation their leaders might be able to craft in negotiations with the White House. In his weekly address Saturday, U.S. President Barack Obama pressured Congress to act, saying the country's economy would be damaged if tax rates increase.

"We just can’t afford a politically self-inflicted wound to our economy," he said.  "The economy is growing, but keeping it that way means that the folks you sent to Washington have to do their jobs.  The housing market is healing, but that could stall if folks are seeing smaller paychecks.  The unemployment rate is the lowest it’s been since 2008, but already, families and businesses are starting to hold back because of the dysfunction they see in Washington."

Watch President Obama's weekly address:



Resolution of tax and spending issues has long stymied Washington leaders, with Obama's Democratic Party colleagues mostly favoring higher taxes to fund popular social welfare programs, while Republican Party lawmakers adamantly oppose tax increases, even 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.
The negotiators are also grappling with decisions on other key issues, including unemployment benefits, taxes on large inheritances and possible cuts in payments to doctors who treat elderly Americans.

Even if the Democratic-controlled Senate votes for a compromise deal, the Republican-led House of Representatives would also have to approve the measure. Passage of tax-and-spending legislation there is far from certain.

However, if Congress can agree on a compromise, the president could sign the measure late Monday, which would avoid having automatic tax increases on nearly all Americans kick in Tuesday.

Neither side has publicly given any indication that a deal can be reached.

Even if a deal is reached, however, it is unlikely to increase the U.S. government's current borrowing limit of $16.4 trillion. Treasury Secretary Timothy Geithner says the nation's debt ceiling will be reached Monday, New Year's Eve.  The ceiling is a cap on how much money the government can borrow to avoid defaulting on its debt.

Geithner says Treasury officials will take what he calls "extraordinary measures" under the law to avoid default.

The Congress and White House are then expected to negotiate a new limit in the next couple months, although it, too, will likely produce a contentious debate over Washington's spending priorities.

Some information for this report was provided by AP, AFP and Reuters.

You May Like

Russia-Ukraine Crisis Could Trigger Cyber War

As tensions between Kyiv and Moscow escalate, so too has frequency of online attacks targeting government, news and financial sites More

Egyptian Court Jails 23 Pro-Morsi Supporters

Meanwhile, Egyptian officials say gunmen have killed two members of the country's security forces More

Pakistani Journalists Protest Shooting of Colleague

Hamid Mir, a host for private television channel Geo, was wounded after being shot three times Saturday, but is expected to survive More

This forum has been closed.
Comment Sorting
Comments
     
by: rgw46 from: usa
December 30, 2012 1:54 PM
Also pass around..ALL current taxes(codes) eliminate .One tax for ALL..falt tax..sales..no exceptions..something we ALL can watch.and again NO exceptions


by: dan from: calif
December 30, 2012 11:15 AM
No debt limit increase. Get you filthy hands out of the pockets of our children and grand children.


by: wing ding from: chicago
December 30, 2012 9:19 AM
A continuing embarrassment - that's our "government." Suggest we clean up at home before we go proselyting to other countries. Or maybe we could learn a thing or two about democracy from those who are fighting for it as we speak.

In Response

by: rgw46 from: usa
December 30, 2012 1:52 PM
>Pass this around<what is amazing..all the news and comments..these CAREER politicians that are elected> and YOU people should listen<get paid by us..tax payers, along with there Medical/retirement..I say..STOP all pay..they are to GET out of DC..close down there fancy offices and apartments that WE tax payers pay for..and send them home..They can Tel Conference to do the same thing>> NOTHING << and stop there PAY and benefits until it is fixed..

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Ukraine, Russia, United in Faith, Divided in Politicsi
X
Michael Eckels
April 19, 2014
There is a strong historical religious connection between Russia and Ukraine. But what role is religion playing in the current conflict? In the run-up to Easter, Michael Eckels in Moscow reports for VOA.
Video

Video Ukraine, Russia, United in Faith, Divided in Politics

There is a strong historical religious connection between Russia and Ukraine. But what role is religion playing in the current conflict? In the run-up to Easter, Michael Eckels in Moscow reports for VOA.
Video

Video Face of American Farmer is Changing

The average American farmer is now 58 years old, and farmers 65 and older are the fastest growing segment of the population. It’s a troubling trend signaling big changes ahead for American agriculture as aging farmers retire. Reporter Mike Osborne says a new report from the U.S. Census Bureau is suggesting what some of those changes might look like... and why they might not be so troubling.
Video

Video Donetsk Governor: Ukraine Military Assault 'Delicate But Necessary'

Around a dozen state buildings in eastern Ukraine remain in the hands of pro-Russian protesters who are demanding a referendum on self-rule. The governor of the whole Donetsk region is among those forced out by the protesters. He spoke to VOA's Henry Ridgwell from his temporary new office in Donetsk city.
Video

Video Drones May Soon Send Data From High Seas

Drones are usually associated with unmanned flying vehicles, but autonomous watercraft are also becoming useful tools for jobs ranging from scientific exploration to law enforcement to searching for a missing airliner in the Indian Ocean. VOA’s George Putic reports on sea-faring drones.
Video

Video New Earth-Size Planet Found

Not too big, not too small. Not too hot, not too cold. A newly discovered planet looks just right for life as we know it, according to an international group of astronomers. VOA’s Steve Baragona has more.
Video

Video Copts in Diaspora Worry About Future in Egypt

Around 10 percent of Egypt’s population belong to the Coptic faith, making them the largest Christian minority in the Middle East. But they have become targets of violence since the revolution three years ago. With elections scheduled for May and the struggle between the Egyptian military and Islamists continuing, many Copts abroad are deeply worried about the future of their ancient church. VOA religion correspondent Jerome Socolovsky visited a Coptic church outside Washington DC.
Video

Video Critics Say Venezuelan Protests Test Limits of Military's Support

During the two months of deadly anti-government protests that have rocked the oil-rich nation of Venezuela, President Nicolas Maduro has accused the opposition of trying to initiate a coup. Though a small number of military officers have been arrested for allegedly plotting against the government, VOA’s Brian Padden reports the leadership of the armed forces continues to support the president, at least for now.
Video

Video More Millenials Unplug to Embrace Board Games

A big new trend in the U.S. toy industry has more consumers switching off their high-tech gadgets to play with classic toys, like board games. This is especially true among the so-called millenial generation - those born in the 1980's and 90's. Elizabeth Lee has more from an unusual café in Los Angeles, where the new trend is popular and business is booming.
Video

Video Google Buys Drone Company

In its latest purchase of high-tech companies, Google has acquired a manufacturer of solar-powered drones that can stay in the air almost indefinitely, relaying broadband Internet connection to remote areas. It is seen as yet another step in the U.S. based Web giant’s bid to bring Internet to the whole world. VOA’s George Putic reports.
AppleAndroid