Politics
Obama: No ‘fiscal cliff’ deal without higher tax rates on rich
‘Fiscal cliff’ arises from last year’s impasse
“To protect the middle class while reducing the deficit, simple math dictates that tax rates must rise on the top two per cent of taxpayers next year,” Senate Democratic Majority Leader Harry Reid said in a statement.
“The sooner Republicans grasp that reality, the sooner we can avoid the fiscal cliff.”
The fiscal cliff is a combination of expiring Bush-era tax cuts and automatic, across-the-board spending cuts due to take effect in January.
The cliff is a result of prior failures of Congress and the Obama administration to make a budget deal.
The GOP proposal itself revives a host of ideas from failed talks with Obama in the summer of 2011. Then, Obama was willing to discuss politically risky ideas such as raising the eligibility age for Medicare, implementing a new inflation adjustment for Social Security cost-of-living adjustments and requiring wealthier Medicare recipients to pay more for their benefits.
By GOP math, the plan would produce more than US$2 trillion in budget savings over the coming decade: US$800 billion in higher taxes; US$600 billion in savings from costly health care programs like Medicare; US$300 billion from other proposals such as forcing federal workers to contribute more toward their pensions; and US$300 billion in additional savings from the Pentagon budget and domestic programs funded by Congress each year.
