'Fiscal Cliff' countdown: 2 days to go, Congress still negotiating

December 30, 2012

If a broader deal on the "fiscal cliff" cannot be reached soon, the Senate should vote on legislation to make sure middle-class taxes are not raised and that 2 million people don't lose unemployment benefits, President Barack Obama told NBC's "Meet the Press" in an interview broadcast Sunday.

"Over the next 48 hours, my hope is that people recognize, regardless of partisan differences, our top priority has to be to make sure that taxes on middle-class families do not go up that would hurt our economy badly," Obama said. "We can get that done."

The president's appearance on a political talk show is his first in three years, and clearly appears timed to put pressure on lawmakers to get a deal done or take a vote. The interview was recorded on Saturday.

With tax rates set to increase across the board on Tuesday, the Senate's top Democrat and Republican were working Sunday to forge a last-minute compromise to stop the U.S. economy from going over a fiscal cliff that would not only trigger higher taxes but sweeping spending cuts.

Aides for Senate Majority Leader Harry Reid, D-Nevada, and Minority Leader Mitch McConnell, R-Kentucky, said no details on the negotiations were expected until at least early afternoon, when the Senate convenes a session at 1 p.m. ET.

At stake in the negotiations, according to a number of economists, is the fate of a still fragile U.S. economy that could be pushed back into a recession by the broad tax hikes and automatic $110 billion cuts to domestic and military spending spelled out by the fiscal cliff legislation.

Obama again placed blame on Republicans for the failure to reach a compromise, saying they "have had trouble saying yes to a number of repeated offers."

He said if they could agree to a deal that keeps middle-class tax rates as they are, "that takes a big bite out of the fiscal cliff, it avoids the worst outcomes."

Then there can be some more tough negotiations on the other aspects of debt reduction, he said.

On Capitol Hill, "We've been trading paper all day, and the talks continue into the evening," McConnell told reporters Saturday night. "We've been in discussions all day. We'll let you know as soon as we have some news to make."

Even so, it was unknown if Reid and McConnell could come up with a deal that would be acceptable to House Republicans, who refused just before Christmas to take up a compromise bill because it raised taxes and had no chance of passing the Senate.

The principal dispute continues to be over taxes, specifically over Democrats' demand to extend tax cuts passed under President George W. Bush for families making less than $250,000 a year, while raising the rates on those making more than that.

The expectation is that Republicans will try to raise that income threshold to $400,000 and push to keep estate taxes low; Democrats have said they might be open to one such scenario, but not both.

Obama and Democrats have leverage, based on the president's re-election last month and Democrats' gains in the House and Senate in the new Congress. In addition, polls consistently show majority support for Obama's position on taxes, and Democrats insist the House would pass the president's plan, with Democrats joined by some Republicans, if House Speaker John Boehner, R-Ohio, allowed a vote on it.

"We're now at a point where, in just a couple of days, the law says that every American's tax rates are going up. Every American's paycheck will get a lot smaller, and that would be the wrong thing for our economy," the president said in his weekly address broadcast Saturday.

On Friday, following a meeting with congressional leaders and top administration officials, Obama said he was "modestly optimistic" the Senate leaders would reach an agreement. At the same time, he conceded, "Nobody's going to get 100% of what they want."

However, conservative activist Grover Norquist has vowed to back primary challenges against Republicans who violate his widely signed pledge not to raise taxes. Even if a deal is reached, Norquist has predicted yet more budget showdowns every time the government needs additional money to operate.

The House will reconvene Sunday, and the chamber's Republicans will get together sometime early Sunday night, according to a note sent Saturday to legislators and staffers.

Republicans have opposed any increase in tax rates, and Boehner suffered a political setback by offering a compromise -- a $1 million threshold for the higher rates to kick in -- that his GOP House colleagues refused to support.

The saga has fueled disdain for politicians by many Americans. Such contempt is deserved, said Rep. Steven LaTourette, an Ohio Republican, who is retiring from Congress.

"I think America should be embarrassed by its leadership in D.C.," he told CNN on Friday. "The fact that we have been unable to do things, and instead worried about our next elections ... I think it's sinful."

http://www.cnn.com/2012/12/30/politics/fiscal-cliff/index.html

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