Fiscal cliff in sight for politicians

Published on 02/12/2012 00:00

POLITICIANS in Washington were warned yesterday that they have one month to step back from the so-called “fiscal cliff” – across-the-board tax hikes and austerity-driven spending cuts likely to return the country to recession.

John Boehner, the Republican House speaker, said that President Barack Obama’s latest offer – to raise revenue by $1.6 trillion over the next decade – would be a “crippling blow” to a still struggling economy.

The Ohio Republican told reporters he would continue working with Obama on the issue, but gave a gloomy assessment of the talks so far. “There’s a stalemate. Let’s not kid ourselves,” Boehner said. “Right now, we’re 
almost nowhere.”

Obama, who has called for the issue to be settled before Christmas, visited a Philadelphia suburb to campaign for his demand that any deal include higher tax rates on US couples earning more than $250,000 a year. He also wants to keep the smaller tax burden lower income earners have had for about a decade.

Speaking at a toy factory, Obama said allowing taxes to rise for the middle class would amount to a “lump of coal” for Christmas.

The austerity measures that will automatically take effect on 1 January unless a deal is made are the price of Washington’s inability to deal with the fact the country spends far more than it takes in.

Politicians in both parties are showing no signs of abandoning the partisanship that has crippled legislative action despite Obama’s strong victory. White House officials believe Obama’s trip will build momentum for his case, even as Republicans describe it as an irritant and an obstacle to productive talks.