On November 8, 2012, Bloomberg
reported that Obama and Boehner "left open the possibility of agreement on preserving current tax rates while limiting tax breaks for top earners to raise revenue. Such an approach, which neither has explicitly proposed, would let Obama claim the higher tax payments he seeks from the wealthy and allow Boehner to avoid the higher rates he calls unacceptable."
President Obama's senior campaign adviser David Axelrod said he is encouraged by statements made by John Boehner, even though Boehner is standing firm on the Republicans' previous positions on tax cuts for the wealthy and Obama is standing firm on tax cuts for the middle-class.
"In late February 2012, Ben Bernanke, chairman of the U.S. Federal Reserve, was the first person to use the term "fiscal cliff
" for this crisis. Before the House Financial Services Committee he described that "a massive fiscal cliff of large spending cuts and tax increases" would take place on January 1, 2013."
The fiscal cliff consists of a number of laws that will result in tax increases, spending cuts, and a corresponding reduction in the budget deficit, including a 19.63% increase in taxes and 0.25% reduction in spending. The amount could total $800 billion next year, based on Congressional Budget Office estimates.
Posted from the White House
website, "President Obama says that it’s time for Congress to pass the middle class tax cuts for 98 percent of all Americans. Both parties agree that this will give 98 percent of families and 97 percent of small businesses the certainty that will lead to growth, and so there is no reason to wait. On Tuesday, the American people voted for compromise and action, and the President calls on Congress to come together in that spirit to help create jobs and strengthen our economy."
The laws and tax increases are because of the Bush tax cuts expiration and across-the-board spending cuts under the Budget Control Act of 2011, passed under the political environment of a partisan stalemate. Social Security, federal pensions and veterans' benefits, are exempted from the spending cuts.
In detail, Deseret News
reports that the fiscal cliff includes:
* Bush-era tax cuts will expire on income, investments, married couples and families with children and inheritances.
* $55 billion, 9 percent cut to the Pentagon next year and another $55 billion in cuts to domestic programs, including a 2 percent cut to Medicare providers.
* The expiration of unemployment benefits for the long-term jobless and a sharp cut in reimbursements for doctors participating in Medicare.
* The expiration of Obama's temporary 2 percentage point cut in payroll taxes.
* The imposition of the alternative minimum tax on some 26 million households, which would raise their taxes by an average of $3,700.
* Some Democrats have called on Obama to propose renewing the payroll tax cut but he has not taken a position.
Spending for federal agencies and cabinet departments, including defense, would be reduced through across-the-board cuts (referred to as budget sequestration
). Many Democrats and Republicans alike agree that compromise is not out of the question, excluding the political nay-sayers from both party sides who refuse to recognize political compromise.
According to David Axelrod, "I think that the Speaker's comments have been encouraging and, obviously, there's money to be gained by closing some of these loopholes and applying them to deficit reduction, so I think there are a lot of ways to skin this cat so long as everybody comes with a positive, constructive attitude toward the task."