US Senate approves bill to avert “fiscal cliff”
The House of Representatives is due to put the document to vote later this Tuesday.
The US Administration and the Republican opposition in Congress agreed yesterday the compromise terms for adopting the draft law.
These terms specifically provide for budget cuts, to ensure the automatic reduction of the budget by 1 trillion dollars in the next 10 years.
Another some 600 billion dollars should be generated and channelled to the Treasury through gradually increased taxation.
Voice of Russia, TASS
The Barack Obama Administration and the Republican opposition in Congress have reached agreement on budget and taxes in a move that will help avoid “fiscal cliff”, according to the Senate Democratic majority leader, Harry Reid, and the Democratic minority leader in the House, Nancy Pelosi.
In keeping with one point, tax benefits will remain in force for the Americans whose annual income makes up over 400,000 dollars per person or 450,000 dollars per family.
The two sides, have, besides, agreed to postpone by two months the coming into force of major reductions in budget spending.
Voice of Russia, TASS
With only hours left until the end-of-year fiscal cliff deadline, Congress is not expected to make a deal regarding the fiscal cliff.
Only hours after President Barack Obama and leading members of Congress said on Monday afternoon that a deal between lawmakers was within reach, reports out of Washington suggest that a compromise will not be made before the new year. Bloomberg News and CNBC both reported eight hours before the 12-midnight deadline that no vote would be made before the end of the year.
If the fiscal cliff can’t be averted, there will be a lot in store for the new year. Taxes will go up, spending will go down and the limit on how much money the United States can borrow will once again be maxed out.
For starters, just about every working American can expect to see changes in their paycheck in 2013. If a deal isn’t cut on Capitol Hill before January 1, payroll taxes will increase across the board by two full percentage points, at least for the first $113,700 of income earned. Payroll taxes will rise instantly from 4.2 to 6.2 percent, snipping a substantial amount of money from every middle- and lower-class worker’s paycheck starting right away to help save the country from default.
Even those who don’t need to work will be asked to endure some austerity policies, too: Americans earning high wages will be asked to pay all new taxes to cover the cost of Pres. Obama’s hallmark health care legislation, and Capital gains and qualified dividends will be subject to higher fees, as well.
Those already without work won’t be having it any easier, either. Extended unemployment benefits will be over instantly for around 2 million residents, effecting many of the Americans on the lookout for work but unable to find any - currently around 7.9 percent of the labor force. Additionally, those looking for assistance will be subjected to a scaled back entitlement program, with funding for Medicare expected to be trimmed by around one-third.
The unemployed, of course, won’t be the only Americans pinching pennies. Should Congress fall to act in time, federal spending will see some significant changes. Also inevitable if the Senate and House can’t hold it together are billions of dollars in defense spending being stripped away. In all, sequestration would trigger around $1.2 trillion in automatic cuts, with an estimated $55 billion being taken out of the Pentagon in just 2013. During the next decade, the military would miss out on around ten-times that amount.
"If they are allowed to occur as currently scheduled, the long-term consequences will permanently alter the course of the US economy's performance, changing its competitive position in the global economy," Dr. Stephen Fuller of George Mason University and Chmura Economics and Analytics determined in a report on sequestration earlier this year. According to those researchers, more than 2 million Americans will see their jobs eradicated in just 2013 because automatic spending cuts will make their jobs essentially obsolete.
Of course, tax hikes aren’t imperative and the military budget might be saved from a severe slashing. Democrats and Republicans in halves of Congress are trying to come to an agreement that will see lawmakers making serious sacrifices in order to keep the country afloat during a time of tremendous fiscal turmoil.
"Analysts expect that the austerity crisis will weaken the economic recovery and quite possibly plunge the United States back into a recession," the Washington Post reports this week.
Back in June, Federal Reserve Chairman Ben Bernanke warned that Washington lawmakers would have until the end of the year to iron out a deal or suffer some seriously grim consequences.
“The so-called fiscal cliff would, if allowed to occur, pose a significant threat to the recovery,” Bernanke warned. “If no action were taken and the fiscal cliff were to kick in in its full size, I think it would be very likely that the economy would begin to contract or possibly go even into recession, and that unemployment would begin to rise.”
That was six months, though, and senators and congressman have but only a few hours before the new year arrives.
Speaking from the White House Monday, December 31, Pres. Obama offered an early afternoon address that seemed to suggest a deal was almost all set.
"Keep the pressure on over the next 12 hours or so," he said. "Let's see if we can get this thing done."
President Barack Obama weighed in on the dire fiscal cliff situation from the White House Monday afternoon, only hours before the United States is expected to encounter a monetary catastrophe if Congress fails to reach an agreement.
With every minute counting before millions of Americans are forced to endure an automatic tax hike, President Obama appeared confident that the House of Representatives and Senate will strike a deal.
"It appears an agreement to prevent this new year’s tax hike is in sight," said President Obama, while at the same time assuring a deal was "not done" just yet.
Voice of Russia, RT