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  • Nov 27, 2014
  • Updated: 6:59pm

Fiscal Cliff

The fiscal cliff involves US$600 billion in automatic tax hikes and spending cuts effective in early 2013 if US lawmakers fail to agree on reducing the budget deficit.

 

NewsWorld
UNITED STATES

First 'fiscal cliff' meeting called constructive

Session between Obama, congressional leaders on tax, spending deal called 'constructive'

PUBLISHED : Sunday, 18 November, 2012, 12:00am
UPDATED : Sunday, 18 November, 2012, 3:11am

The first face-to face meeting between President Barack Obama and US congressional leaders about the so-called fiscal cliff yielded optimism but few details on how they would resolve their disagreements.

House Speaker John Boehner and White House Press Secretary Jay Carney both described Friday's meeting as "constructive".

The meeting at the White House featured the same leaders who have tried and failed to bridge their differences on fiscal policy before.

Treasury Secretary Timothy Geithner said: "They said what you'd hope for them to say at this point, which is that this is something we can do; we're committed to do it; we want to do it as soon as we can; we know the stakes are very high."

Geithner said he thought an agreement was "doable within several weeks".

The "fiscal cliff" is the US$607 billion combination of automatic spending cuts and tax increases scheduled to take effect in January. Lawmakers are trying to avert the cliff to prevent a short-term shock to the US economy and reach an agreement on long-term deficit reduction.

A Senate Democratic aide said Democrats emphasised in the meeting that their priority was allowing tax cuts to expire for top earners. Democrats were optimistic, the aide said, because Republicans did not immediately reject that rate increase.

Senate Democratic leader Harry Reid, who was in the meeting, said leaders would meet Obama in the final week of November.

"This isn't something that we're going to wait until the last minute" to get done, Reid said.

While tax questions will be central in the fiscal talks, the two sides also will consider a down payment on replacing automatic spending cuts should discussions on a broader plan fail, according to congressional aides.

In the meeting, Boehner told Obama that they should try to set revenue and spending targets with statutory requirements to meet the goals, a Boehner aide said. Staffers will be working while Congress and Obama are out of Washington to prepare ideas for negotiators to consider.

Democrats and some Republicans are starting to talk publicly about a more modest increase in upper-income tax rates.

Participants in financial markets think it is almost impossible that the negotiations will fail, said John Engler, president of the Business Roundtable, an association of chief executives of large US corporations.

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