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President Barack Obama met with congressional leaders on Friday in order to begin negotiations to avoid the approaching “fiscal cliff.”
The “fiscal cliff” is a combination of tax increases and spending cuts that is set to start in January 2013, unless Obama and Congress can come to an agreement on the budget.
The law was put into place in 2011, as a sort of punishment after Congress was unable to compromise with Obama on his “grand bargain” to lower the United State’s deficit.
In his first congressional meeting since his reelection, Obama met with House Speaker John Boehner, Senate Majority Leader Harry Reid, Senate Minority Leader Mitch McConnell and House Minority Leader Nancy Pelosi at the White House.
Afterwards, both Republican and Democrats appeared to be optimistic about the country being able to avoid the “fiscal cliff.”
“I believe that we can do this,” Boehner, R-Ohio, said once the White House meeting concluded.
Despite their confidence that both parties will be able to form an agreement, a compromise doesn’t appear to be coming any time soon.
Obama is standing by the budget plan originally established in his campaign. He says he will not sign anything that doesn’t enforce higher taxes for the wealthy. He insists that he wants to impose higher taxes on the wealthiest 2% of Americans: those making at least $200,000 per year individually and households making $250,000 or more.
Republicans, on the other hand, stand by their position that they will not tolerate tax raises on the wealthy.
“What we won’t do is raise taxes,” McConnell, R-Ky, said in a public statement on Thursday.
Boehner still holds the same position he held prior to the election, saying that closing loopholes in the tax codes will increase revenue and that higher taxes for the wealthy will hurt the economy.
However, a negotiation could eventually be possible, as the party is no longer completely united on the issue.
Governor Bob McDonnell, R-Va, encouraged his party to consider higher taxes for the wealthy because of the election results. “People have spoken,” he said.
Obama wants to overcome the parties’ conflicting positions.
Obama said, “That’s an agenda that Democrats and Republicans and independents, people all across the country share. So our challenge is to make sure that we are able to cooperate together, work together, find some common ground.”
Because of the approaching December 31 deadline, a law solving all of the complex issues may not be possible. Instead, lawmakers such as Pelosi, D-Calif, proposed a plan that would temporarily avoid the “fiscal cliff” and set a foundation for a more permanent deal in the future.
She said, “The speaker spoke about a framework going into next year. I was focusing on how we send a message of competence to consumers, to the markets, in the short run, too.”
The White House staff will continue to work on an agreement as Obama leaves for Asia on Saturday.
One thing both parties can agree on is that letting the “fiscal cliff” happen would hurt the country’s economy.
If a solution cannot be agreed upon, 90% of taxpayers in America will be affected. The “fiscal cliff” could also push the economy into recession and increase unemployment.
One of Boehner’s deputies, Republican Representative Peter Roskam, said at a budget conference, “Going over the fiscal cliff, in my view, is a bucket of crazy.”