Open

Coming up

Don't miss

Replay


LATEST SHOWS

THE WORLD THIS WEEK

The World This Week - 01 August 2014 (part 2)

Read more

MEDIAWATCH

Coverage of Gaza in the Israeli media

Read more

REPORTERS

1914-1918: The Depths of Hell

Read more

THE WORLD THIS WEEK

The World This Week - 01 August 2014

Read more

THE INTERVIEW

Exclusive: Israel's US ambassador speaks to FRANCE 24

Read more

#THE 51%

World War One: The war that changed women’s lives

Read more

FRANCE IN FOCUS

Ségolène Royal goes for green

Read more

THE OBSERVERS

A look back at some of the Observers' best stories

Read more

DEBATE

Argentina Defaults: Kirchner Cries Foul Over 'Vulture Funds' (part 2)

Read more

  • Hamas denies capturing Israeli soldier as Gaza truce lies in tatters

    Read more

  • Exclusive: Israel's US ambassador speaks to FRANCE 24

    Read more

  • Police 'chokehold' caused NYC death, coroner rules

    Read more

  • Air France ground workers to strike on August 2

    Read more

  • Rogue general denies Islamist seizure of Benghazi

    Read more

  • Ugandan court strikes down anti-gay legislation

    Read more

  • 1914-1918: The Depths of Hell

    Read more

  • Regional summit to tackle deadly Ebola outbreak

    Read more

  • French hospital to open wine bar for terminally ill patients

    Read more

  • Video: Tipping is dying out in French café culture

    Read more

  • €2.5 million in cocaine ‘disappears’ from Paris police HQ

    Read more

  • Appeal court keeps French rogue trader Kerviel in jail

    Read more

  • Interactive: France’s new plan to counter jihadism in Africa

    Read more

  • Ukrainian army suffers losses in separatist attack

    Read more

  • Argentinian markets plummet following default

    Read more

  • French Jews speak of growing fear in Paris amid Gaza conflict

    Read more

Americas

'Fiscal cliff' showdown heads into final hours

Text by FRANCE 24

Latest update : 2012-12-31

Congress finds itself in the throes of a tense final countdown on Monday, with just hours to reach a deficit reduction deal before widespread tax increases and federal spending cuts go into effect in the new year.

A tense countdown was in full effect on Monday, as the US Congress was left with mere hours to come up with a deal to prevent the country from going over the “fiscal cliff” -- and therefore facing widespread tax increases and federal spending cuts at the start of the new year.

The combination of tax hikes and cuts in domestic programmes could send the slowly improving US economy sliding back into recession, some economists argue.

If no deal is reached before Tuesday, taxes will go up for nearly every taxpayer and a significant number of businesses, and the 2% payroll tax cut Obama signed in 2010 (credited with increasing the average employee’s annual take-home salary by $1,000) will expire.

Among the federal programmes to expire if no agreement is forged will be emergency unemployment payments for millions who remain out of work but no longer qualify for state subsidies.

To help avoid such dire consequences, Vice President Joe Biden - following President Barack Obama’s lead - cut his Christmas holiday short, rushing to Washington DC on Sunday night to meet with Senate leaders in the hopes of finding a last-minute compromise.

What is a ‘wealthy American’?

Obama and Speaker of the House John Boehner (the top Congressional Republican) have been embroiled in largely deadlocked talks for weeks, with taxes as the main sticking point. Republicans want to renew the existing tax rates for everyone, and reduce the deficit primarily through cuts to “entitlement” programmes (like Medicare, government-funded healthcare for the elderly). Democrats want to raise tax revenue by imposing higher rates on the wealthiest Americans, while trimming federal programmes more sparingly.

The threshold for what income qualifies one as belonging to the category of “wealthiest” Americans has shifted over the course of talks. Obama has stuck to $250,000 as the minimum annual salary to be taxed at a higher rate, though many Congressional Democrats have expressed willingness to raise that number to $400,000.

Republicans in the House of Representatives have insisted that the cut-off needs to be higher, even rejecting Boehner’s proposal to raise taxes only on individuals earning more than $1 million annually as too much of a compromise.

With both President Obama - boosted by his decisive re-election victory in November - and House Republicans refusing to bend on the tax issue, Boehner has urged the Democrat-controlled Senate to try to reach a deal (which would, of course, then have to pass the House).

Senate Republicans have indicated that they are more willing to compromise on the tax issue than their counterparts in the other chamber, proposing to allow rates to rise on individuals earning more than $450,000 a year.

But if the Senate fails to reach a deal on Monday, it could vote instead on a temporary measure, proposed by Obama, which would postpone the question of raising taxes on the wealthy, but prevent tax hikes on incomes lower than $250,000 and extend unemployment benefits.

On Sunday, Obama appeared on popular TV programme “Meet the Press”, adopting a firm tone when addressing Congress. “We have been talking to the Republicans ever since the election was over,” he said. “Now the pressure’s on Congress to produce.”

Recent opinion polls have consistently shown that Americans agree with Obama’s assessment, with the majority finding fault with Congressional Republicans - and not the president - for the stalled talks and whatever damage may ensue.
 

Date created : 2012-12-31

  • USA

    Washington on edge as ‘fiscal cliff’ deadline looms

    Read more

  • USA

    Obama ups pressure on Republicans over fiscal deal

    Read more

  • USA

    Obama 'modestly optimistic' on fiscal cliff deal

    Read more

COMMENT(S)