Obama, GOP Signal Deadlock on 'Fiscal Cliff'Sunday, 08 Jul 2012 |
President Obama is setting the stage for another tax battle
with Republicans as lawmakers signaled on Sunday a worsening deadlock in
Congress over how to tackle critical fiscal deadlines looming at year's end,
including deciding whether to extend tax cuts for the wealthiest Americans.
Obama plans to call for a one-year extension of the Bush-era tax cuts for people
making less than $250,000 on Monday in a Rose Garden announcement,
The New York Times reports. House GOP leaders want to extend the cuts
permanently for middle- and -upper income people, and a vote is expected in the
House later this month.
And the move potentially puts Obama in a position to oppose Democratic leaders
including Representative Nancy Pelosi and Sen. Charles E. Schumer who want to
extend the cuts for everyone earning up to $1 million. But Obama, facing a tough
re-election fight with increasingly bad economic numbers, is hoping the move
will make Republican leaders appear inflexible.
In the meantime, a scenario known by economists as the "fiscal cliff" could
unfold at the end of the year. The historically low tax rates first enacted
under Republican former President George W. Bush in 2001 and 2003 are set to
expire at the end of the year if Congress fails to act, as are jobless benefits
for the long-term unemployed and a temporary payroll tax cut.
In addition, $1.2 trillion in across-the-board reductions in spending on federal
programs would begin to phase in as a result of Congress' failure late last year
to find a comprehensive deal to cut the budget deficit.
The United States also is expected to hit the $16.4 trillion statutory limit on
its debt sometime between the November 6 U.S. election and the end of the year.
If Congress fails to raise it, it would lead to a U.S. default.
Robert Gibbs, a senior adviser to President Obama's re-election campaign, said
the president was "100 percent committed" to allowing the Bush-era tax cuts for
Americans making $250,000 and above to expire at the end of the year while
keeping in place tax cuts for middle-income people.
"We should protect the tax cuts for the middle class and we should let tax cuts
for millionaires and billionaires expire," Gibbs told CNN's "State of the
Union," adding that wealthy Americans should "begin to pay their fair share."
Republicans argued against allowing any of the Bush-era tax cuts to disappear.
Senate Republican Leader Mitch McConnell, also speaking on "State of the Union,"
said, "You know, what we ought to be doing is extend the current tax rates for
another year with a hard requirement to get through comprehensive tax reform one
more time."
Republicans control the House of Representatives and Obama's fellow Democrats
control the Senate. The deadlock over the fiscal path forward comes months
before Obama seeks re-election against Republican challenger Mitt Romney in
November.
Representative Tom Price, a member of the House Republican leadership, said the
House would pass Republican legislation before the end of July to keep tax rates
at current levels for another year - preserving the Bush-era cuts.
Price said on the "Fox News Sunday" program that Romney supports that move
"because he believes that will stimulate the economy and provide certainty out
there in the job market."
Representative Xavier Becerra, a member of the House Democratic leadership, said
Democrats would not support any measure that did not address the nation's fiscal
challenges on a long-term basis.
"Those are bills to nowhere," Becerra said, referring to the House Republicans'
legislation to extend the Bush tax cuts. "Tom knows it won't become law. We need
to work together to come up with a real proposal that can pass both houses and
get signed by the president."
"It's time for us to do something, rather than work against each other," Becerra
said on "Fox News Sunday."
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