Fiscal Cliff talks head toward compromise solution

Free audio stream, including stories that are padlocked on our site. Listen on any device, anywhere. Updated twice daily. The audio stream takes several seconds to start on Android devices.

Launch Radio player

Talks in Washington to avoid the Fiscal Cliff are continuing against a deadline that expires at midnight local time (6pm NZ time).

Latest reports say White House and Senate Republicans are closing in on a budget compromise that would raise tax rates on couples making more than $US450,000 a year, increase taxes on large inheritances and extend unemployment benefits for a year.

However, with the New Year deadline approaching, negotiators are hung up on how, if at all, to postpone the $US110 billion in spending cuts due to take effect on January 2.

Another aspect of the emerging deal would limit the number of personal exemptions as well as the value of itemised deductions, two restrictions that would kick in at $US250,000 for individuals and $US300,000 for couples. Those limits were abolished as part of the 2001 Bush tax revamp.

In a delayed appearance at the White House, President Obama said negotiators had made "progress" over the past few days toward a deal.

"It appears that an agreement to prevent this New Year's tax hike is within sight, but it's not done," he said. "There are still issues left to resolve but we're hopeful Congress can get it done."

He said negotiators on "the potential agreement" are still struggling to agree on a way to tackle the automatic spending cuts, known as the sequester, that are set to take effect in coming days.

He said the emerging compromise, which is far smaller than policy makers had hoped to achieve, would keep taxes from increasing on the middle class and lay a foundation for larger deficit reduction in the future.

"If Republicans think I will finish the job of deficit reduction through spending cuts alone... then they've got another thing coming," the president said. "That's not how it's going to work. We've got to do this in a balanced and responsible way."

Failure to reach an agreement between the Republican-dominated House and Democratic-controlled Senate will trigger tax increases for most Americans, as well as the first tranche of spending cuts that run until September 30.

Meanwhile, the talks are centred on efforts by Senate Minority Leader Mitch McConnell, a Republican, and Vice President Joe Biden to come up with a compromise solution.

Other fundamental divisions remain: the Republicans want any tax increase to go toward reducing the deficit, while the Democrats want any increased tax revenue to pay for items likely to be hit by spending cuts, such as extending unemployment benefits.

The short-term fate of the US economy rests on the outcome as well as the reputation of the government, which have been tarnished by seemingly endless series of negotiations that have run over two weeks without success.


1 ยท Got a question about this story? Leave it in Comments & Questions below.

This article is tagged with the following keywords. Find out more about MyNBR Tags

1 Comment & Question

Commenter icon key: Subscriber Verified

Obama may well lead the USA into become the largest Welfare dependent country in the world, if he believes that raising taxes, and throwing money at welfare ..his elector base.. is the answer to the USA deficit problems.

Reply
Share
  • 0
  • 0

Post New comment or question

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.

NZ Market Snapshot

Forex

Sym Price Change
USD 0.7234 -0.0079 -1.08%
AUD 0.9344 0.0003 0.03%
EUR 0.6651 -0.0014 -0.21%
GBP 0.4708 -0.0017 -0.36%
HKD 5.6067 -0.0590 -1.04%
JPY 89.1350 0.2330 0.26%

Commods

Commodity Price Change Time
Gold Index 1204.0 -0.520 2015-05-22T00:
Oil Brent 65.9 1.310 2015-05-22T00:
Oil Nymex 59.7 -1.040 2015-05-22T00:
Silver Index 17.0 -0.081 2015-05-22T00:

Indices

Symbol Open High Last %
NZX 50 5795.0 5813.1 5795.0 0.02%
NASDAQ 5076.9 5081.2 5089.4 -1.26%
DAX 11841.5 11920.3 11815.0 -1.64%
DJI 18229.8 18229.8 18232.0 -1.05%
FTSE 7031.7 7039.6 7031.7 -1.37%
HKSE 28462.3 28524.6 27992.8 0.92%
NI225 20431.3 20473.8 20413.8 0.12%