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think US might go over the cliff...


Senate Democratic Majority Leader Harry Reid has ordered the Senate back into session at 11:00 am (1600 GMT) on Monday, the last day before the deadline know as the "fiscal cliff." Two days of last-gasp talks produced no deal Sunday between US political leaders struggling for a compromise to head off a punishing package of spending cuts and tax hikes due to come into force on January 1 that could roil global markets and plunge the United States back into a punishing recession - PHOTO: REUTERS
WASHINGTON - US lawmakers will work on New Year's Eve for the first time in more than 40 years in a last-ditch attempt to save the United States from a fiscal calamity that will result in stiff tax hikes and drastic spending cuts.
Senate Democratic Majority Leader Harry Reid has ordered the Senate back into session at 11:00 am (1600 GMT) on Monday, the last day before the deadline know as the "fiscal cliff." Two days of last-gasp talks produced no deal Sunday between US political leaders struggling for a compromise to head off a punishing package of spending cuts and tax hikes due to come into force on January 1 that could roil global markets and plunge the United States back into a punishing recession.
"There is still time left to reach an agreement, and we intend to continue negotiations," Mr Reid said.
But "there is still significant distance between the two sides," he told the Senate, after huddling for nearly two hours with his Democratic caucus.
Discouraged by a lack of progress in Washington, investors worldwide pulled back from the markets.
Asian stocks fell as hopes that US lawmakers will reach a deal to avert the fiscal cliff faded. Hong Kong closed flat, edging down 9.67 points. Sydney closed 0.48 percent lower, shedding 22.4 points.
European stocks also fell in opening deals. London's FTSE 100 index of top companies dropped 0.39 percent and in Paris the CAC 40 shed 0.58 percent.
Speaking at the Capitol, Reid said Democrats were unwilling to brook talk of social security cuts.
"This morning, we have been trying to come up with some counteroffer to my friend's proposal," Mr Reid told the Senate.
"We have been unable to do that."
Senate Republican Minority Leader Mitch McConnell also warned that, despite talks through the night, negotiators were still a long way from success.
Mr McConnell told AFP he received no response to a "good faith offer" to Senate Democrats and had spoken twice by telephone with his old friend and sparring partner Vice President Joe Biden in the hope of breaking the stalemate.
If leaders fail to find agreement, President Barack Obama has demanded a vote on his fallback plan that would preserve lower tax rates for families earning less than US$250,000 a year and extend unemployment insurance for two million people.
Republicans admitted such an option could emerge on Monday.
The already tense mood on Capitol Hill soured during Sunday's confusing hours, when some lawmakers tossed out varying versions of what may or may not be in Democratic and Republican offers.
"I'm incredibly disappointed we cannot seem to find common ground. I think we're going over the cliff," Republican Senator Lindsey Graham said on Twitter.
Moderate Democrat Clair McCaskill was also pessimistic.
"This is definitely not a kumbaya moment," she said.
Earlier, Mr Obama accused Republicans of causing the mess, saying they had refused to move on what he said were genuine offers of compromise from his Democrats.
In an interview with NBC's "Meet the Press" that was recorded on Saturday, Mr Obama said it had been "very hard" for top Republican leaders to accept that "taxes on the wealthiest Americans should go up a little bit, as part of an overall deficit reduction package." Republicans were irked by Obama's tone.
"I don't know if this is the president saying US$250 (thousand) or 'Go to hell,'" Ms Graham told reporters, referring to Mr Obama's insistence that taxes rise on households income greater than a quarter million dollars per year.
The Senate's number two Democrat, Dick Durbin, said Republicans want the tax threshold to be raised to US$550,000 per household and that Democrats might counter with US$450,000, considerably higher than the president's US$250,000.
But Mr Reid warned: "We're still left with a proposal they've given us that protects the wealthy and not the middle class. I'm not going to agree to that."
Any deal must pass the Senate before going to the House, where such is the power of the conservative bloc of the Republican Party that it is unclear whether any solution backed by Mr Obama can win majority support.
If no deal is reached, a package of tax cuts for all Americans that was first passed by then-president George W. Bush will expire on January 1.
All American workers will see their paycheck hit, and the broader economy will suffer from massive automatic spending cuts across the government.
The future of the estate tax is also on the table. Democrats want to raise the tax from 35 percent to 45 percent and apply it to estates above US$3.5 million, rather than the current US$5.2 million. Republicans want to maintain the current rates.
Besides taxes, the two sides are debating whether to extend unemployment benefits for two million Americans and maintain Medicare payments to doctors at the current rate, according to congressional officials.
The overall package being discussed would not stop US$109 billion in federal government spending cuts set to start after January 1, or extend a two-percentage-point cut in the payroll tax, set to expire with the tax cuts passed under former president George W Bush.
It also would not increase the government's debt limit.
Experts expect the US economy to slide into recession if the standoff is prolonged, in a scenario that could cause turmoil in stock markets and hit prospects for global growth in 2013. -- AFP

(31-12-2012, 04:30 PM)cfa Wrote: [ -> ]EU markets don't like the stalemate, all in red.
LOL the unthinkable has happened, due to this uncertainty the crows will feed can expect a sell off in markets tomorrow? Wink bad luck for those who took side bets expecting a last minute breakthru like in past talks. Tongue

http://www.foxnews.com/politics/2013/01/...-deadline/
there isn't much problem now. both parties will work to have a lower tax for middle-class and higher government spending since the tax rate is high and the spending has been cut in Jan 1st, 2013.

now both parties have similar agenda.
Contradictory to what Obama's press statement ?

' No decision on accepting 'cliff' pact: Boehner '
http://www.todayonline.com/Hotnews/EDC13...t--Boehner

(01-01-2013, 02:55 PM)cfa Wrote: [ -> ]Contradictory to what Obama's press statement ?

' No decision on accepting 'cliff' pact: Boehner '
http://www.todayonline.com/Hotnews/EDC13...t--Boehner


No contradiction. The House has not voted yet.
If they pass the the deal, it seemed like most of the detail is settled other than the spending cut.

----------------------------------------
Here's What the 'Fiscal Cliff' Deal Looks Like

Published: Tuesday, 1 Jan 2013 | 1:00 AM ET

The U.S. Senate was expected to vote early on Tuesday on a deal to avert $600 billion in automatic tax increases and spending cuts in the "fiscal cliff" that could hobble the economy if allowed to take effect this week.

If this alternative to the fiscal cliff passes the Senate, the House of Representatives could also vote on the measure later on Tuesday.

Here are details of the deal, according to congressional sources:

* Postpones for two months the start of $1.2 trillion in automatic spending cuts over 10 years, known as the "sequester." For those two months, $24 billion in savings would be substituted. Half of those savings would be split between defense and non-defense programs. The other half includes new revenues.

* Raises $600 billion in revenue over 10 years through a series of tax increases on wealthier Americans.

* Permanently extends tax cuts made in 2001 by Republican President George W. Bush for income below $400,000 per individual, or $450,000 per family. Income above that level would be taxed at 39.6 percent, up from the current top rate of 35 percent.

* Above that income threshold, capital gains and dividend tax rates would return to 20 percent from 15 percent.

* Caps personal exemptions and itemized deductions for income above $250,000, or $300,000 per household.

* Raises estate tax rate to 40 percent for estates of more than $10 million per couple, up from the current level of 35 percent.

* Includes a permanent fix for the alternative minimum tax.

* Extends unemployment insurance benefits for one year for 2 million people.

* Extends child tax credit, earned income tax credit, and tuition tax credit for five years.

* Extends research and experimentation tax credit, and the wind production tax credit through the end of 2013. Extends 50 percent bonus depreciation for one year.

* Avoids a cut in payments to doctors treating patients on Medicare - the so-called "doc fix."

* Temporarily extends farm programs.

* Cancels a cost-of-living raise for members of Congress.

http://www.cnbc.com/id/100346815
Senate clears fiscal-cliff accord; taxes to rise
‘Sequester’ spending cuts delayed for two months

http://www.marketwatch.com/story/progres...beforebell
The fate of a deal to avert a US "fiscal cliff" budget calamity looked in increasing peril on Tuesday as Republicans in the House of Representatives balked at endorsing it in a swift vote.

The deal to cut newly-raised taxes on most Americans and to make the rich pay the highest tax rates since Bill Clinton's 1990s presidency passed the Senate in a dramatic moment of political theater two hours into 2013.

But hopes of a timely vote in the House on Tuesday were dashed amid signs that Republicans are angry that the pact raises taxes on the rich and yet does nothing to cut spending on social programs that swell the deficit.

"We have to in some way address spending," Republican congressman Spencer Bachus said, confessing he would be "shocked" if the bill was not amended in the House to add spending cuts before being being sent back to the Senate.

Such a move would likely unleash turmoil when global markets open on Wednesday for the first time in the New Year, with investors already irked at US government dysfunction certain to be dismayed at signs of a new logjam.

It could also splinter bipartisan support for the deal in the Democratic-led Senate in a scenario that could hold the economy hostage to Washington wrangling for several more days.

One House Republican, Tim Huelskamp, said that the powerful number two Republican in the chamber Eric Cantor told a high stakes meeting of the party caucus that he was opposed to the bill.

"The principal reason is there are no spending cuts," said Huelskamp.

A colleague, Robert Woodall, also complained that the bill did not address government spending, calling the compromise thrashed out by Senate Republicans and the White House "unbelievable."

"I would not vote for it as it comes to the floor right now."

A second meeting of House Republicans caucus was expected later Tuesday.

http://sg.finance.yahoo.com/news/white-h...nance.html
House expected to vote but based on one with amendments, which will then be sent back to the Senate.
The Republicans must show their anger but they will vote for the deal.
Antagonising the citizens may cause them to lose the House control.
Not a pleasant thought since they had already lost the Presidency election and control of Senate.
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