President Obama has decided to cut short his holiday vacation with the first family amid ongoing political discussions to avert the “fiscal cliff” approaching Jan. 1.
Obama left the sunny beaches of Hawaii just one day after Christmas. If a deal is not reached within the next few days, automatic spending cuts will go into effect causing Bush-era tax cuts to expire for 98 percent of middle- and lower-class Americans.
Entitlement programs, such as Social Security, would also suffer, as would defense spending.
“Think about the obligations we have to the people who sent us here. Think about the hardship that so many Americans will endure if Congress does nothing at all,” Obama said in Dec. 21 statement.
Under the plan proposed by the president, individuals and couples making more than $250,000 would see a tax increase, and middle and lower class Americans would be able to route more of their money to food, gas, and other necessities.
“This is something within our capacity to solve. It doesn’t take that much work,” said Obama. “We just have to do the right thing. So call me a hopeless optimist, but I actually still think we can get it done.”
Republicans have been resistant to a deal, even rejecting other options that would raise the tax increase threshold to those making $400,000 or more. Many GOP members are among those who have signed a pledge promising to never raise taxes.
“What the president has offered so far simply won’t do anything to solve our spending problem and begin to address our nation's crippling debt,” House Speaker John Boehner (R-Ohio) said in a statement on avoiding the automatic cuts. “Instead, he wants more spending and more tax hikes that will hurt our economy. And he refuses to challenge the members of his party to deal honestly with entitlement reform and the big issues facing our nation.”
Boehner said that he believed revamping the current tax code and taking firm action against “crippling debt” was the only solid way to move forward and expand opportunities for the American people.
A new report from the Congressional Budget Office outlined possible outcomes should the nation fall over the fiscal cliff.
“That contraction of the economy will cause employment to decline and the unemployment rate to rise to 9.1 percent in the fourth quarter of 2013,” the CBO said.
The agency added that even if the tax cuts, first initiated in 2001, were extended, Congress would still have to agree on a way to cut spending. Currently, even without the threat of the fiscal cliff, the country would still be in danger of taking on too much debt.