30 December 2012
Last updated at 14:36 GMT
President Obama said he had made significant compromises in an attempt to break the deadlock
US
President Barack Obama has increased pressure on Republicans to accept a
deal aimed at stopping the country going over a "fiscal cliff".
Speaking on NBC's Meet the Press, he said the "overriding,
unifying theme" of the Republicans appeared to be protecting tax breaks
for the wealthy.
Congress must reach a deal by the end of the year to avert steep spending cuts and tax rises due to take effect.
If they fail, taxes will significantly rise for most Americans.
This has raised fears of reduced consumer spending triggering
a US economic slowdown, which in turn would damage the global economy.
Republicans and Democrats tried to resolve the looming crisis
in 2011 but failed, instead signing temporary agreements which
postponed the deadlock until the end of 2012.
Democrat Senate leader Harry Reid and his Republican
counterpart Mitch McConnell have been locked in negotiations over the
weekend, in an otherwise closed-down Capitol.
According to the Washington Post, they have set themselves a
deadline of 15:00 local time (20:00 GMT) to reach a compromise
agreement, after which they will convene caucus meetings of their
members and decide whether the measure has enough support to be put to a
vote.
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The offers that I've made to them have been so fair that a lot of Democrats get mad at me”
Barack Obama
The Senate could then vote on the measure and allow the House of Representatives enough time on Monday to consider it,
said the paper.
In an interview recorded on Friday and broadcast on Sunday,
Mr Obama said that the priority before then was to ensure taxes will not
rise for middle-class families, saying that would "hurt our economy
badly".
"That's something we all agree on. If we can get that done, that takes a big bite out of the 'fiscal cliff'," he said.
Republican and Democratic leaders remain divided over core ideological issues about tax and government funding.
There is also debate over where to set the threshold for tax
rises. Democrats say tax cuts introduced by former President George W
Bush and now due to expire should be extended for all Americans except
the richest, those with annual earnings of more than $250,000
(£155,000), who should pay more.
Republicans want the tax threshold set higher, at around
$400,000, and for revenue to be raised by economic growth and cuts in
social security and mandatory spending programmes.
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America's reckless politicians may still take the country over the cliff into an uncertain land where recession looms”
Mr Obama said he had made
significant comprises already by offering to cut or reform welfare
programmes in exchange for raising taxes for the highest earners and
criticised Republicans for not accepting the offer.
"They say that their biggest priority is making sure that we
deal with the deficit in a serious way, but the way they're behaving is
that their only priority is making sure that tax breaks for the
wealthiest Americans are protected. That seems to be their only
overriding, unifying theme," he said.
"The offers that I've made to them have been so fair that a lot of Democrats get mad at me."
Some Republicans have pledged never to vote for increased
taxes. There are some indications they could oppose any deal which
included higher taxes.
The president said that if all else failed and taxes did go
up, he would introduce a bill when Congress reconvenes on 4 January to
cut them.
End to benefits
The term fiscal cliff refers to the combination of almost
$600bn (£370bn) of tax rises and spending cuts due to come into force on
1 January if Congress fails to pass new legislation.
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What is the fiscal cliff?
- On 1 January 2013, tax increases and huge spending cuts are due to come into force - the so-called fiscal cliff
- Deadline was put in place in 2011 to force president and Congress to agree ways to save money over the next 10 years
- Fear is that raising taxes while massively cutting spending will have a huge impact on households and businesses
- Experts believe it could push the US into recession, and have a global impact on growth
Sweeping Bush-era tax cuts will expire, eventually affecting people of all income levels, and many businesses.
While some of the impact would be felt almost immediately,
other effects would take longer to filter through. This could damage
America's recent fragile economic recovery and alarm global markets.
In addition, the US Treasury is set to hit its legal borrowing limit of $16.4tn on 31 December.
Last week, Treasury Secretary Timothy Geithner won a reprieve
of about two months. But the debate on the borrowing ceiling will also
need to be properly addressed in the new year, raising the prospect of
more political gridlock.
The tax cuts and benefits set to expire include:
• A 2010 payroll tax cut, the expiration of which would prompt immediate wage-packet cuts
• Benefits for the long-term unemployed, which could mean more than two million Americans immediately stopped receiving payments
• Compensation for doctors treating patients on federal healthcare programmes
• Inheritance taxes are also likely to be affected if no deal is reached.
In addition, spending cuts mandated by a law passed to break a
previous fiscal impasse in Congress will come into force, affecting
both military and domestic budgets.
The cuts are expected to affect federal government
departments and the defence sector, as well as hitting unemployment
insurance and veterans' support.
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