US President Barack Obama said that a deal over the country’s so-called fiscal cliff was “within sight, but not done” on Monday just hours before a midnight deadline.
With mere hours to go before the US fell off its so-called “fiscal cliff” at midnight Monday, President Barack Obama said that a deal was “within sight”, but that there were still issues to be resolved.
Speaking at a White House press conference Monday afternoon, Obama urged Congress to hammer out an agreement ahead of the midnight deadline, saying there was still more work to be done. The president also expressed regret that his administration and Congress had failed to reach a “grand bargain” to address the country’s chronic deficit spending, saying such a compromise was not possible “with this Congress, at this time”.
After Obama’s speech, Republican lawmakers said no deal would be reached before the prescribed deadline, saying the vote would probably be pushed back until Tuesday, when US markets are closed for the New Year and any possible fallout would be minimal.
Earlier in the evening, officials familiar with negotiations said a deal was in the works that would see tax increases on the country’s wealthy. However, they also said that no agreement had been reached on what to do about spending cuts.
The officials, who requested to remain anonymous, said that households making over $450,000 a year would see taxes hiked to 39.6 percent, while the tax on estates worth more than $5 million would also rise to 40 percent from 35 percent.
But the White House and Republicans were said to be at an impasse over what to do about automatic, across-the-board spending cuts set to start taking effect Tuesday. Democrats want to put off the cuts for one year and offset them with unspecified revenue. As it stands now, the deal would raise $600 billion in revenue over the next 10 years.
Failure to reach a 'grand bargain'
If Congressional leaders fail to reach a fiscal deal on time, taxes will go up for nearly every taxpayer and a significant number of businesses, and the 2 percent payroll tax cut Obama signed in 2010 (credited with increasing the average employee’s annual take-home salary by $1,000) will expire. Spending to the tune of $109 billion will also be cut from defense and domestic programmes.
The consequences of not reaching an agreement could be dire. Economists have warned that a recession could result if the full sweep of the fiscal cliff is allowed to take hold in January, while the Congressional Budget Office has predicted the nation would lose up to 3.4 million jobs. On top of that, if the limit on how much the government can borrow isn’t raised, the country will have officially reached its $16.4 trillion ceiling on Monday, which could lead to a first-ever default in February or March that would shake worldwide confidence in the United States.
(FRANCE 24 with wires)
Date created : 2012-12-31