Politics & Government

'Fiscal Cliff' Looms as Congress Gets Back to Work

President, Congress have just a few days to avert automatic tax increases and spending cuts. Rhode Island's reps are urging their Republican colleagues to get back to work.


Congress and President Obama are racing against the clock this week as they make a final attempt to hammer out a deal to avoid the so-called “fiscal cliff” the U.S. government is set to go over on New Year’s Day.

Without a compromise deal to lower the deficit, the government will face a self-imposed deadline that triggers both spending cuts and higher taxes. Congress itself set the Jan. 1 deadline after failing to come to a budget compromise earlier this year.

On Jan. 1, the George W. Bush-era tax cuts will expire, raising taxes on nearly all Americans. In addition, $1.2 trillion in spending cuts to defense and government programs will go into effect.

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The week before Christmas, it looked like a deal was possible, as President Obama and Congressional leaders were just a few hundred million away in taxes and spending.  

But Congress recessed the Friday before Christmas after Speaker of the House Republican John Boehner failed Thursday evening to pass his “Plan B,” which would have extended tax cuts for most Americans and raised taxes on those making more than $1 million.

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Earlier in the day, the House did pass a bill that moved billions in cuts to defense spending to other areas of government spending, including entitlements and programs for lower-income Americans. President Obama said he would veto that bill should it reach his desk.

Last Thursday evening, Boehner said in a statement, “The House did not take up the tax measure today because it did not have sufficient support from our members to pass. Now it is up to the president to work with Senator (Harry) Reid on legislation to avert the fiscal cliff."

In response, the White House released a brief statement: “The President’s main priority is to ensure that taxes don’t go up on 98 percent of Americans and 97 percent of small businesses in just a few short days. The President will work with Congress to get this done and we are hopeful that we will be able to find a bipartisan solution quickly that protects the middle class and our economy.”

Closer to home, Rep. Jim Langevin (D-Rhode Island) stressed his opposition to Boehner's "Plan B," hammering Repubicans for playing politics while faiing to negotiate in good faith on the fiscal cliff.

"We shouldn't be wasting any more time on these political distractions just to appease a Tea Party Caucus that is out of step with the American people," Langevin said in a statement. "Democrats have offered a balanced plan of new revenue and targeted spending cuts that protect the middle class, and I'm ready to compromise to get a bill passed. Republicans need to get serious and come to the table with a good faith effort to solve the fiscal cliff, not recycle old policies which will harm the most vulnerable among us.”

Rep. David Cicilline added his criticism of House Republicans for refusing to work on fixing the potentially recession-inducing fiscal cliff. “After Speaker Boehner failed to get support from his own Republican members for his partisan fiscal cliff proposal, he walked away from negotiations and adjourned for the Christmas holiday," Cicilline said. "This is a terrible result for Rhode Island families and small business owners. President Obama has consistently worked toward reaching a bipartisan solution, but House Republicans have decided not to continue these discussions."

What does going over cliff mean?

What going over the cliff actually means for the recovering U.S. economy is still up for debate among economists and political analysts.

The cliff is more of a slope in terms of the timeline for spending cuts—they take effect over the next decade—but the still-recovering jobs market will take a hit and the combination of higher taxes and spending cuts by the government and businesses could send the economy back into recession, some economists predict.

In the meantime, executives in the defense industry and CEOs of companies large and small are having difficulty budgeting for next year as uncertainty remains about both tax rates and cuts in government spending.

Consumers will feel the difference immediately with the expiration of the Bush-era tax cuts. The Tax Policy Center, a non-partisan group, estimates middle-class households would see an increase of almost $2,000 in federal taxes, or about $75 per bi-weekly paycheck.

Following a , “For them to be burdened unnecessarily because Democrats and Republicans aren’t coming together to solve this problem gives you a sense of the costs involved in very personal terms. … Obviously, it would also have an impact on our economy, because if this family has a couple of thousand dollars less to spend, that translates into $200 billion of less consumer spending next year. And that’s bad for businesses large and small. It’s bad for our economy. It means less folks are being hired, and we can be back in a downward spiral instead of the kind of virtuous cycle that we want to see."

Starbucks baristas are writing "come together" on all cups in the Washington, DC, area to encourage Congress and the President to come together to fix the fiscal cliff issue. For more information about this initiative, go to www.patch.com/fixthedebt.


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