Over the Fiscal Cliff: How Hard a Landing?
WASHINGTON -- Efforts to save the nation from going over a year-end "fiscal cliff" were in disarray as lawmakers fled the Capitol for their Christmas break. "God only knows" how a deal can be reached now, House Speaker John Boehner declared.
President Barack Obama, on his way out of town himself, insisted a bargain could still be struck before Dec. 31. "Call me a hopeless optimist," he said.
A look at why it's so hard for Republicans and Democrats to compromise on urgent matters of taxes and spending, and what happens if they fail to meet their deadline:
New Year's Headache
Partly by fate, partly by design, some scary fiscal forces come together at the start of 2013 unless Congress and Obama act to stop them. They include:
- Some $536 billion in tax increases, touching nearly all Americans, because various federal tax cuts and breaks expire at year's end.
- About $110 billion in spending cuts divided equally between the military and most other federal departments. That's about 8% of their annual budgets, 9% for the Pentagon.
What if They Miss the Deadline?If New Year's Day arrives without a deal, the nation shouldn't plunge onto the shoals of recession immediately. There still might be time to engineer a soft landing. So long as lawmakers and the president appear to be working toward agreement, the tax hikes and spending cuts could mostly be held at bay for a few weeks. Then they could be repealed retroactively once a deal was reached.
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