Tags: bipartisan | fiscal | cliff | deal

'Bipartisan Cliff' Stands in the Way of Avoiding the Fiscal Cliff

Friday, 23 Nov 2012 07:47 AM

By John Morgan

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A “bipartisan cliff” shows why a grand Congressional spending and tax deal is proving so tough to forge by the drop-dead date of Dec. 31, according to an analysis by Investors Business Daily (IBD).

Even if Republicans now seem more willing to move to a middle ground, there is no visible sign Democrats will accept the pain of meeting halfway on spending, IBD said.

The newspaper viewed the deal likelihood through the prism of the Bipartisan Policy Center’s framework for discussions. The group was founded by former Senate majority leaders from both the GOP and Democratic parties.

Editor's Note: 'It’s Curtains for the US' — Hear Unapologetic Warning from Prophetic Economist.

The Bipartisan Policy Center recommends Congress and the White House commit to $4 trillion in 10-year deficit savings — half via tax reform and half from entitlements.

As prelude to that bargain, the group recommends a bipartisan accord to “turn off” the fiscal cliff to avoid the year-end expiration of tax cuts and deep automatic spending cuts set by law to take effect on Dec. 31 if no deal is reached.

Going over the fiscal cliff could be bitter medicine. By some accounts, it would trigger $1.7 trillion each in quick tax hikes and spending cuts, a cold plunge some observers feel would by itself throw the United States into a new recession.

Meanwhile, the White House has proposed only about $600 billion in savings to mandatory programs, IBD said, and Senate Majority Leader Harry Reid, D-Nev., intends to exclude Social Security from the fiscal cliff negotiations. Also President Barack Obama continues to insist on an immediate tax hike on households earning $250,000 or more.

On the GOP side, House Speaker John Boehner, R-Ohio, has proposed both sides agree on long-term targets for both tax reform and entitlement savings.

“Once we settle on those targets the Speaker proposed, we can create simple mechanisms, in statute, that would achieve those revenue and spending cuts,” Boehner’s office said. “They would be in place unless or until more thoughtful policies replace them.”

So far, while they are looking for deep spending cuts, there is no sign the Republicans are willing to settle for a 50-50 split between tax hikes (as opposed to tax reform) and spending cuts, IBD reported.

“Entitlement reform is where most of the money will come from if we are going to reach an agreement, get our financial affairs in order and save ourselves from another recession — or worse,” Conservative blogger Ed Roger wrote in a Washington Post opinion piece.

“No serious person thinks we can tax our way to real deficit reduction. Most of the savings must come from spending restraint.”

But an opinion piece in the Los Angeles Times stated that “the left argues that slashing federal spending will choke off the recovery. So Democrats have started using phrases such as the ‘fiscal slope’ to describe the looming problem.”

Editor's Note: 'It’s Curtains for the US' — Hear Unapologetic Warning from Prophetic Economist.

© 2014 Moneynews. All rights reserved.

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