VIDEO: Obama: Tax Deal May Be in Sight
On Monday, President Barack Obama said that an agreement to avoid the impending fiscal cliff of spending cuts and automatic tax enhancement was ‘on sight’.
According to Obama, if the deal were made, it would help avoiding a tax boost for the majority of Americans, especially for the middle-class people. The deal would also lengthen the unemployment benefits for at least 2 million people, expand tuition credits for families and for clean-energy businesses, and extend the child tax. Though there were still some issues to be resolved, Obama hoped that the Congress could make it before the deadline.
He urged the supporters to keep the pressure on the lawmakers for the next 12 hours or so in the hope of getting things done.
A GOP source informed CNN that the negotiators almost finalized a deal, where the sticking point in spending cuts would be $24 billion instead of a deeper cuts and that would go effect at midnight automatically.
The source said that the matter had become like looking under the cushions where they should pack everything if they failed to find that. A source from congressional Democrat also admitted spending cuts to be the key to hold up at this point. However, the GOP source also confirmed that they were unlikely to cast votes on the proposal before Tuesday. In fact, the House Republicans wanted to gain some benefits by settling the issue on Tuesday night rather than on Monday night. The taxes will go up on Tuesday. So, by approving the bill on that day, the House Republicans can say that they have brought that rates back down by voting for a tax cut. One source said that the trick could bring some more Republicans on board. The source also added that it would not be something big but they needed the difference that a handful could bring to them.
The sources close to the procedure said that the discussed proposal aimed for determining the tax rates prevalent in Clinton-era for the high-income people, lengthening the period for unemployment benefits, enhancing the estate tax rates, and supposedly avoiding the $110 billion in automatic spending cuts.
The proposal under discussion will impose 39.6% tax rate on families with more than $450,000 annual income and individuals over $400,000. It will also increase the current level of 35% estate tax to 40%.
Apart from the discussions over tax proposals, discussion was also there to postpone the $110 billion automatic cuts in military and domestic spending for the next 9 months. A Democratic source said that while the Democrats wanted to prevent the cuts for one year, the Republicans wanted to delay it for no more than 3 months.
If no deal is there until the Monday midnight, tax hikes will kick the U.S. economy. It will also affect the economy that will possibly experience a recession and the unemployment rate will increase too.