President Barack Obama and the 112th Congress have begun work on preventing the United States from reaching the fiscal cliff.
The fiscal cliff is an automatic reduction in the United States budget deficit beginning in 2013 that was part of a compromise enacted to resolve the public debt ceiling crisis in 2011. The Congressional Budget Office has warned that without action, the fiscal cliff could move the U.S. economy into a recession.
If Congress fails to reach an agreement, Bush-era tax cuts will expire along with across-the-board spending cuts to domestic and defense funding. President Obama’s temporary 2 percent payroll tax break will also expire. There would be about $500 billion worth of tax increases and $109 billion in government spending cuts that would all start on Jan. 2, 2013
President Obama is pushing for a bipartisan solution, calling for an increase in taxes on those making over $250,000 per year in order to increase revenue, coupled with targeted cuts to discretionary programs.
Republican House Speaker John Boehner has stated that any plan including an increase in taxes would not be considered with the closing of tax loopholes as the only acceptable way to raise revenue.
Some GOP legislators have broken with House Speaker Boehner’s position, even speaking out against anti-tax activist and lobbyist Grover Norquist’s taxpayer protection pledge that requires the opposition to any net income tax increases, regardless of the circumstance.
Republican Senator Lindsey Graham of South Carolina and Republican Senator Saxby Chambliss of Georgia have both said they would consider an increase in taxes to raise revenue.
“I care more about my country than I do about a 20-year-old pledge,” Chambliss said to Georgia’s WMAZ radio station. “If we do it Norquist’s way then we’ll continue in debt, and I just have a disagreement with him about that.”
Democratic Senator Harry Reid stated that once the fiscal cliff was avoided, reforms to filibuster rules in the Senate and immigration reform would be high priority for next year’s Congress.