The time for compromise post-election may not only favor a deal to avoid the fiscal cliff, it may also foster talks to resolve the nation’s growing debt problem.
In fact, a failed deal between President Obama and House Speaker John Boehner in 2011 may serve as the blueprint for successful negotiations in this second go-round.
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Part of those talks on a $4 trillion deficit reduction plan included a gradual increase in the eligibility age for Medicare to 67. It also included an alternative way to calculate inflation that would reduce annual cost-of-living adjustments of Social Security benefits.
Although labor unions and other special interest groups are opposed to cutting benefits for Medicare and Social Security, this could be a starting point to negotiate a multi-trillion deal on debt reduction.
The White House has planned an aggressive public campaign to rally support for its efforts to reduce the deficit by increasing taxes and cutting spending. This is a sharp contrast to the private talks it tried to hold with Republicans last year.
The President will meet with labor groups and a group of executives who may influence different segments of lawmakers in Congress.
He has planned these meetings to begin crafting a package of deficit-reduction measures that could also encompass and take the place of negotiations to avoid the fiscal cliff.
The White House believes the President can use momentum from the election to marshal outside support and increase pressure on Republicans to soften their resistance to increasing taxes on higher income taxpayers.
Several prominent Republicans have indicated over the past few days that compromise on tax increases was possible.
You can find a nice chart here
that easily explains the fiscal cliff and that you could show your clients in speaking to them about their year-end tax planning for 2012.
You can also discuss with them the likelihood that some type of compromise
will be reached and how to best prepare them for whatever may result.