Fiscal cliff mediators face high hurdles
WASHINGTON — It’s entirely possible that lawmakers and the White House will reach a deal that staves off an avalanche of tax increases and deep cuts in government programs before a Jan. 1 deadline.
To do so, however, they’ll have to resolve deep political and fiscal disagreements that have stymied them time after time despite repeated promises to overcome them.
For many economists, corporate leaders and politicians, it’s unconscionable to let the government veer over the “fiscal cliff,” which could drain $500 billion from the still-struggling economy next year. But even President Barack Obama says it could happen.
Many Republicans in Congress counter that it’s Obama who is too unyielding.
The knottiest issues facing the White House and congressional negotiators include:
TAX RATES
Obama campaigned on a pledge to end the George W. Bush-era tax cuts for households making more than $250,000 a year. Re- publican leaders say the lower rates from 2001 and 2003 should remain in place for everyone, including the rich.
LOBBIES, STATUS QUO
Both parties have talked, vaguely, of raising revenues by limiting the itemized tax deductions claimed by about one-third of the nation’s taxpayers. Among the most popular deductions are those for charitable donations, health care costs and mortgage interest payments.
50-50 NATION
The past few presidential elections prove the country is almost evenly split between Democratic and Republican sentiments. But thanks to legislative gerrymandering, Americans’ migration patterns and other factors, many House members represent districts that are overwhelmingly conservative or liberal.
This is especially apparent among some House Republicans who say Obama’s re-election victory means little to them and their constituents. GOP insiders say Speaker John Boehner expects to lose as many as 70 of his 241 fellow Republicans on a career-defining vote on an eventual compromise package to resolve the fiscal cliff.
CONSTITUENTS
For years, Americans have enjoyed high levels of government service at low levels of taxation, historically speaking. So the government borrows about one-third of every dollar it spends, piling up debt for future genera- tions.
That kind of tough talk makes life difficult for Boehner, Obama and the handful of other leaders trying to find a way to avoid a New Year’s drive over the fiscal cliff.