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Thursday, November 8, 2012

Washington Gears Up For ‘Fiscal Cliff’ Showdown

A man stands outside a securities firm in Tokyo on Thursday. Asian stock markets tumbled Thursday after a ratings agency threatened to downgrade the U.S. if a solution to the so-called fiscal cliff isn’t negotiated among lawmakers and newly re-elected President Barack Obama. (Junji Kurokawa/AP)

There’s not much time to celebrate re-election for President Barack Obama, who faces an upcoming showdown with congressional Republicans over taxes, deficits and the impending “fiscal cliff.”

House Speaker John Boehner says Republicans are willing to consider some form of higher tax revenue as part of the solution – but only “under the right conditions.”

All sides are setting out opening arguments for the negotiations to come.

Even before returning to Washington from his hometown of Chicago, Obama was on the phone Wednesday with the four top leaders of the House and Senate, including Boehner, to talk about the lame-duck Congress that convenes just one week after Election Day.

Obama adviser David Axelrod warned Republican leaders to take lessons from Tuesday’s vote. The president won after pledging to raise taxes on American households earning more than $250,000 a year “and was re-elected in a significant way,” Axelrod told MSNBC Thursday morning.

Without a budget deal to head off the fiscal showdown, the nation faces a combination of expiring Bush-era tax cuts and steep across-the-board spending cuts that could total $800 billion next year. Economists have warned that could tip the nation back into recession.

Stocks slid on Wall Street Thursday, a day after the Dow Jones industrial average logged its biggest one-day drop of the year, as investors fretted about the potential for gridlock in Washington.

The Wall Street Journal’s David Wessel explains the fiscal cliff (on a cliff):


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  • Guy

    I’ll comment on the radio conversation that you played at the beginning of the story:  
          Please let these people leave with their precious money as soon as possible.  The US Government has nearly destroyed itself trying to make these people happy.   After these “patriots” are gone, we can work to have a safely regulated economy, a responsible government that can logically tax people and corporations, and that has a military suited to the country’s needs.  People will be rewarded for working for their money, and when they retire, their money will be there for them.    It’s time to rethink the foundations of our financial decisions over the last 30 years.  I’m sure we will outperform our expatriot buds quite nicely.

  • BHA_in_Vermont

    Boehner said he would support cutting loopholes and deductions IF the tax rates also went down. He wants to simplify the tax code (a noble and Don Quixote “esque” venture).  This is no different than Romney’s plan. It would not raise any more money. It is also not at all clear who would be paying more and who would be paying less as a result of the loss of deductions and loopholes. The only thing that is assured is that some people will be paying more, some the same,  some less.

    What do you bet the rich, if negatively affected, will shift their income to more tax advantaged sources within a year? That is how Romney legally pays 13.5% on tens of millions of “no work” income.

  • http://twitter.com/Apinak Apinak

    The Bush tax cuts are weighted towards the wealthy and poorly targeted for economic growth, the Pentagon budget is severely bloated and more designed to get Congress reelected than for defense in the 21st century. 

    We should let the tax cuts expire and military cuts take place and then replace them both with spending targeted towards economic growth and investment in the future. Military spending creates 11,000 jobs per $1 billion spent, education spending created 29,000 jobs per $1 billion spent plus all the benefits associated with better education ( http://www.peri.umass.edu/fileadmin/pdf/published_study/PERI_military_spending_2011.pdf). If we take that $500 billion in military cuts over ten years and use it to improve our crumbling educational system it will create 8.75 million jobs with no extra spending.

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