Optimism Drops as Fiscal Talks Resume
The talks regarding the US deficit reduction started with lots of optimism but it started to fade away as Republicans expressed their political resentment over President Barack Obama’s opening offer in avoiding the so-called fiscal cliff from happening. House Speaker John Boehner said that there’s no substantial progress in the negotiations over the past two weeks. He acknowledged that the talks had reached a stalemate.
Both sides have 31 days to reach a compromise before the January 1 deadline. President Barack Obama said that he would like a deal before Christmas. He added that Congress can give families a sense of security with a deal going into the New Year.
Both parties agree that to decrease the deficit, they must do so with the combination of tax increases and cuts in entitlements such as Social Security and Medicare. The White House gave a proposal that would cost $1.6 trillion in new tax revenue for the next decade, which is twice the amount of what was previously proposed.
Senate Minority Leader Mitch McConnell said that he laughed at the offer made by Treasury Secretary Tim Geithner, who is now helping in the negotiations. The president’s plan also involved $600 billion in savings from changes in mandatory spending programs and $200 billion in spending from public works projects.
Lawmakers are set to return to Washington from Thanksgiving break. Republican leaders acknowledge that the federal government needs more revenue cut its $16 trillion deficit as party members need to accomplish the goal by breaking their pledge not to increase taxes.
Both sides of the negotiating table seem to be at odds over the tax cut issue. President Obama wants to extend tax cuts for families earning less than $250,000 yearly. The Republicans said that allowing the cuts expire for the wealthy Americans would hurt the economy.