Senate Leaders Working On A Plan To Address Fiscal Cliff But Postelection Session Will Only Be For Two Weeks And House Republicans Still Refuse To Talk

Tuesday, October 02, 2012 08:02
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Senate Leaders Working On A Plan To Address Fiscal Cliff But Postelection Session Will Only Be For Two Weeks And House Republicans Still Refuse To Talk

Tags: Congress | economy | Taxes

Congress is on recess but Senate leaders are already planning to use the postelection session to carve out a path for dealing with the upcoming fiscal cliff threatening the economy at the end of the year.

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Both parties are still far apart on the details and House Republicans are staunch to the point of avoiding discussions about raising taxes.
 
The idea is for the Senate to develop a target for deficit reduction. That likely will be around $4 trillion over the next decade.
 
The reduction would require overhauling the tax code, changing social programs like Social Security and Medicare, and cuts to federal programs.
 
If that doesn’t work, a plan mimicking the Simpson Bowles proposal, which would reduce spending on federal programs, make changes in Social Security, and lower tax rates while also paring deductions.
 
That plan would produce $2 trillion in additional revenue.
 
Senate leaders would also vote to put off so-called sequestration or automatic spending cuts.
 
Both sides are waiting until after the election to do any negotiating. But Senate leaders think the White House would approve a deal that would reduce the deficit by four times the savings produced by the automatic cut program in exchange for eliminating the program.
 
House Republicans have not participated in the talks and may resist a package yielding significant new revenue even if it wins bipartisan Senate support.
 
Pressure for action is increasing. The Tax Policy Center, which is non-partisan, released a study on October 1 estimating that the expiration of current tax laws would raise taxes by as much as $500 billion over the next year.
 
The postelection session will only last for two weeks. And after so many false starts and dashed hopes, the likelihood is not great that Congress will be able to pull something together over such a short period.

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