US politicians nearing 'fiscal cliff' deal
on 31/12/2012 14:53:19
A source said Democrats have offered to extend tax cuts for families making up to US$450,000 (€340,445) a year and individuals earning up to $400,000 (€302,618).
President Barack Obama originally wanted the tax cuts to be extended only for families on up to $250,000 (€189,136) a year.
Unless an agreement is reached and approved by Congress by the start of New Year's Day, more than $500bn (€378.27bn) in 2013 tax increases will begin to take effect and $109bn (€82.46bn) will be carved from defence and domestic programmes
Meanwhile, the country's chronic deficit spending continues without a deal to address it.
"This whole thing is a national embarrassment," senator Bob Corker, a Republican, said on MSNBC, adding that any solution Congress would come to at this late stage would be inconsequential.
World markets were fairly calm, perhaps on hopes that the tax hikes and spending cuts largely could be held at bay for a few weeks and then repealed retroactively if a deal is reached.
If there's no deal, the effects could be harsh. The nation would lose up to 3.4 million jobs, the Congressional Budget Office has predicted.
And if the limit is not raised on how much the government can borrow, the government's reaching the current $16.4 trillion (€12.4 trillion) ceiling in February or March could lead to a first-ever default that would shake worldwide confidence in the United States.
On top of that, the current Congress is in session only until noon on January 3. After that, a newly elected Congress with 13 new senators and 82 new House members would inherit the problem.