Tags: Shelby | Fiscal | Cliff | fix

Shelby: 'Fiscal Cliff' May Not Be Fixed Until 2013

Tuesday, 17 Jul 2012 08:57 AM

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A sharp fiscal adjustment will strike the economy as the year ends, when tax breaks expire and automatic cuts to government spending kick in, a one-two combo known as “a fiscal cliff.”

Lawmakers must steer the country away from the cliff, which could siphon hundreds of billions of dollars out of the economy next year and send the country sliding back into a recession.

Expect lawmakers to fix the dilemma, but not until it has passed, said Richard Shelby, the ranking Republican on the Senate Banking Committee.

Editor's Note:
The ‘Unthinkable’ Could Happen — Wall Street Journal. Prepare for Meltdown

Republicans oppose raising taxes, and want tax breaks — including the Bush-era tax cuts — extended for everyone.

Democrats want to extend tax breaks but not for wealthier Americans, including households bringing in over $250,000 a year.

Those who earn under that figure would see the Bush tax cuts extended.

"We are not going to raise taxes on anybody, I hope. But we do need tax reform because there are a lot of people paying nothing in this country and getting by," Shelby told CNBC.

"What I'm about is lowering the rates of people's taxes. Including anybody that works," Shelby said.

Will both sides reach a deal on taxes and spending in an election year?

Not likely, Shelby said.

"I believe it will be after the election. And might even be into the new year," Shelby said.

"But I believe we will have a resolution. A lot of it will be dependent on what happens in the election."

Talk is growing that lawmakers can return in the new year after elections and quickly deal with the fiscal cliff by adjusting tax and spending measures on a retroactive basis.

Democrats, meanwhile, have threatened to let the country go over the cliff if they can't push through raising taxes on the wealthy.

"If we can't get a good deal, a balanced deal, that calls on the wealthy to pay their fair share, then I will absolutely continue this debate into 2013, rather than lock in a long-term deal this year that throws middle-class families under the bus," said Senator Patty Murray, a Washington Democrat and a budget committee member, Yahoo News reports.

"If Republicans won't work with us on a balanced approach, we are not going to get a deal," Murray said.

Some estimates see the fiscal cliff wiping out $500 billion out of the economy next year alone and $7 trillion over a decade.

Editor's Note: The ‘Unthinkable’ Could Happen — Wall Street Journal. Prepare for Meltdown


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