President Obama calls Congressional leaders for fiscal cliff update as deadline looms
President Barack Obama telephoned congressional leaders on Thursday from both parties with just a few days left to reach a deal to avoid the year-end tax increases and spending cuts known as the fiscal cliff.
official White House photo Pete Souza
Obama called House Speaker John Boehner (R., Ohio), Senate Minority Leader Mitch McConnell (R., Ky.), Senate Majority Leader Harry Reid (D., Nev.) and House Minority Leader Nancy Pelosi (D., Calif.) late Wednesday during his vacation in Hawaii “to receive an update on the ongoing fiscal negotiations,” White House spokeswoman Amy Brundage said.
The calls come as leaders show little signs of progress toward reaching an agreement before year’s end.
FACTS ON THE FISCAL CLIFF:
The Budget Control Act of 2011 codified in law a grudging political compromise forcing the government to slash spending by $1.2 trillion over 10 years from January 1, 2013.
Next year’s cuts, called “sequestration,” would be about $109 billion.
Also on that date, a package of tax reductions and an extension of unemployment benefits will expire, meaning taxes will rise significantly for most Americans.
CBO’S MIXED REVIEW:
According to the Congressional Budget Office the higher taxes and lowered spending could slice the $1.1 trillion deficit racked up in fiscal 2012 (ended September 30) by almost $500 billion next year. They claim this would “vastly improving the government’s financial picture.”
HOWEVER: the CBO estimates the shock treatment would send the country back to recession and push the unemployment rate to 9.1 percent.
DEBT CEILING UPDATE:
The US government will hit its statutory $16.39 trillion debt limit on Monday, according to Treasury Secretary Timothy Geithner.
The limit is set by Congress, and if it is not raised, the United States will not be able to borrow any more money and would, in theory, be forced to slash spending to make ends meet.
