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Wednesday, July 23, 2014

Will Congress Delay the Fiscal Cliff?

Republican leaders today called for a delay in the fiscal cliff deadline.

As we noted yesterday, fears of the fiscal cliff are prompting manufacturers to scale back production and hiring and, in some cases, make employment cuts. Three days after the general elections, Washington is chiming in.

This morning, House Speaker John Boehner (R-Ohio) held a televised press conference in which he proposed delaying the fiscal cliff deadline of midnight on Dec. 31.

“I’m proposing that we avert the fiscal cliff together in a manner that ensures that 2013 is finally the year that our government comes to grips with the major problems that are facing us,” Boehner said.

The Republican House leader reiterated his position that averting the fiscal cliff should not involve raising taxes but rather by closing loopholes.

“It’s clear that there are a lot of special interest loopholes in the tax code, both corporate and personal,’’ Boehner said, according to The Boston Globe.  “There are all kinds of deductions, some which make sense, some which don’t.’’

Boehner’s recommendation for avoiding the Jan. 2 deadline was to “extend the Bush-era tax cuts through the end of 2013.”

Hours later, President Barack Obama addressed the nation in his own televised event — his first public speech since his re-election on Tuesday, Reuters reports — announcing that next week he would convene a meeting of legislators from both the Republican and Democratic parties, as well as business leaders and labor representatives, to discuss the fiscal deadlines.

The president repeated his intention to raise taxes on those making more than $250,000 annually and cut taxes on middle-class earners. He also mentioned spending cuts but did not specify which ones he plans to endorse.

The fiscal cliff is a series of automatic spending cuts and tax increases set to enact at midnight on Dec. 31 if Congress does not find a way to increase government revenue. As the Council on Foreign Relations (CFR) notes in its fiscal cliff primer, “the abrupt onset of such significant budget austerity in the midst of a still fragile economic recovery has led most economists to warn of a double-dip recession in 2013 if Washington fails to intervene in a timely fashion.”

Brian Lane

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