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WASHINGTON (AP) â¿¿ In a story Dec. 12 about the "fiscal cliff" negotiations, The Associated Press reported erroneously that veterans affairs spending would be included in automatic federal budget cuts if no deal is reached. The Veterans Affairs Department has been exempted.
A corrected version of the story is below:
Why it's so hard to step back from 'fiscal cliff'
Why don't they all just get along? Stepping back from 'fiscal cliff' means making hard choices
By CONNIE CASS
WASHINGTON (AP) â¿¿ The "fiscal cliff" crisis bundles together some of Washington's toughest decisions â¿¿ the ones lawmakers have dodged for years â¿¿ and says settle them all right now. Or else. Yet bedrock differences between Democrats and Republicans stand in the way.
No wonder it's hard to shake hands on a deal by New Year's.
Failure is a lousy option, nonetheless. It would jeopardize the U.S. economy and reverberate around the world. Here's a look at the hazards of the fiscal cliff and why it's so tricky for Congress and President Barack Obama to find a safe way down:
Partly by fate, partly by design, some scary fiscal forces come together in January unless Congress acts to stop them. They include:
â¿¿ Some $536 billion in tax increases in 2013, touching nearly all Americans. George W. Bush-era income tax cuts are set to expire. So is a temporary Social Security tax cut, and several 2009 tax breaks designed to stimulate the economy by aiding low- and middle-income families. The alternative minimum tax would expand to catch more taxpayers. Taxes on investments would rise, too. More deaths would be covered by the estate tax. Some corporate tax breaks would end.
â¿¿ About $110 billion in indiscriminate cuts in federal spending next year. By law, the cuts must be divided evenly between the military and non-defense spending, including limited reductions to Medicare. A few things, such as Social Security benefits, veterans programs and aid for the poor, are exempt. But cuts of almost 8 to 10 percent would sweep across most of government. Plus, federal spending on emergency assistance for the long-term jobless would run out.