The end of the year is nearing, and with that, the prospect of the nation going over the fiscal cliff comes into clearer focus. That, likely, is why President Obama has embarked on tour pitching the case for Congress to extend tax-cuts for incomes below $250,000—a Bush-era piece of legislation.
As CBS reports, it is likely that the President will be underscoring the positive effects of such an extension on vital holiday-period spending. In Hatfield, Pa., the President is set to speak at one of two manufacturing plants of The Rodon Group, a pre-eminent toy manufacturing firm that supplies Tinkertoys, K’NEX Building Sets, Lincoln Logs, and so on.
These and similar companies, naturally, depend on domestic consumption during the holidays. Rodon just recently moved most of its K’NEX manufacturing back to the U.S. from China.
Both the President and House Speaker John Boehner seem committed to drafting a deal that satisfies their respective parties; the problem is that their positions are polar opposites with no apparent middle ground.
The Obama camp demands that tax cuts on incomes over $250,000 be allowed to expire, while Boehner’s camp demands cuts in Medicare, Medicaid, and Social Security. But while Republicans are staunchly opposed to the tax hikes, Democrats refuse to consider program cuts.
Of course, the infamous Norquist pledge has been a recurring topic in the news lately. Several Republicans have recently dispensed with that pledge, which insists that no Republican ever agree to any marginal income tax rates.
The White House is blunt on this matter: Republicans need to accept that tax rates on “the wealthiest” Americans will go up, period. Most recent polls indicate that some 60 percent of the country is with the White House on this issue.
Naturally, the Republican base alleges such tax raises will hamper small businesses, job growth, and will reduce hiring.
“The President has already signed into law over $1 trillion in spending cuts and we remain willing to do tough things to compromise, and it’s time for Republicans in Washington to join the chorus of other voices – from the business community to middle class Americans across the country – who support a balanced approach that asks more from the wealthiest Americans,” Deputy White House Press Secretary Josh Earnest said Thursday.
Although Boehner appears to stand strong, there are hints of cracks beginning to show. Just earlier last week, Tom Cole, GOP deputy whip and former National Republican Campaign Committee chair urged that Republicans accept the President’s call to extend Bush-era tax cuts for the middle class.
What’s important here is that neither party responsible for developing a viable bipartisan solution for a national problem has made much progress so far.
It is absolutely necessary that we avoid going over the cliff and thus avoid a second recession and a return of the economic-collapse-scenario, and it is imperative that the White House and Congress get their acts together.
Equities have been relatively flat as the markets wait to see how close to the cliff we can get.