The postelection atmosphere is ripe for bipartisan efforts on the issue with lawmakers in phone negotiations since the election. Calls and meetings with 25 senators has yielded a draft of a plan to overhaul the tax code and entitlements.
Both Republican and Democratic politicians are now pressing for a deal with Democrats likely feeling empowered from the election and Republicans possibly trying to save face.
Both admit that allowing the fiscal cliff to occur could result in a global financial crisis.
Democratic Senator Charles Schumer of New York extended an olive branch to the Republicans saying he would accept a top tax rate of 35% if loopholes were eliminated for the wealthy but not the middle class.
He had previously ruled out accepting anything less than the 39.6% rate of the Clinton administration.
The Congressional Budget Office (CBO) issued a report on Thursday, November 8, that said automatic spending cuts and the expiration of all current tax breaks would send unemployment back to a rate of 9.1% and would throw the country back into recession.
Some retiring lawmakers and some who lost out in the recent election may have greater freedom to vote for compromise since they don’t have to worry about political consequences.
This may finally be the atmosphere where compromise can be reached and a last-minute stallout can be avoided.
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