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Possible Solutions to the Fiscal Cliff

17 November 2012

The fiscal cliff is a hugely hot topic these days, with everyone from the United States to Canada to Australia having an opinion about it. There’s good reason for it. If the U.S. goes off this cliff, it’s not only going to be them that feels the repercussions. It really will be the fall heard around the world. So, the big question is – what’s going to be done about it?

That is the question, indeed. And not even the lawmakers in America knows the question. As it stands now, President Obama would like to allow the tax cuts to expire, but only for America’s most wealthiest – the top two per cent of earners in the country. These tax increases would bring in some revenue for the American government, which in turn would allow them to cut down that $16.5 trillion national debt. Taxing the wealthiest the most, President Obama has said, will “actually [remove] half the fiscal cliff.”

Two years ago, President Obama extended the tax cuts for another two years – something he was loathe to do, and that he called a “one-time proposition.” He was adamant that he would never extend all of the tax cuts in their entirety ever again, and he seems to be holding true to this. President Obama has also promised to take action that won’t hurt the middle class, but that would still raise the revenue needed to help the country’s deficit.

Taxing the top two per cent would do just that. While it wouldn’t transform the cliff into a plateau, it certainly would make that drop-off a little less steep. So what’s the problem with it?

The Republicans have promised that they wouldn’t raise taxes for anyone, and this is a point that they weren’t going to budge on. This included raising taxes for that top two per cent, which the Republican party was as adamantly against as the Democrats were for it.

However, there is hope that this stalemate the two parties have found themselves in is about to give somewhere.

This hope comes after a meeting on Friday that took place at the White House, with President Barack Obama, the Republican House Speaker, John Boehner, as well as other officials from both parties. This meeting showed the first signs of compromise, as afterwards both parties told a crowd gathered outside of the West Wing that some compromise had been found to get to a solution.

President Obama stated that the compromise, “includes both revenues and cuts in spending,” but said that there is still a challenge to “work together, find some common ground, make some tough compromises.”

Democrat Senate Leader, Harry Reid, agreed with his party President, saying, “We feel very comfortable with each other and this isn’t something we’re going to wait until the last day of December to get it done.”

The Republican House Speaker, John Boehner, even agreed, saying that yes, some compromise has been found; and that the Republicans will even entertain the notion of raising taxes for the wealthiest in the country.

“To show our seriousness,” said House Speaker John Boehner after the meeting on Friday, “we put revenue on the table as long as it’s accompanied by significant spending cuts.”

But, there’s still trouble; and there’s still very serious signs of stubbornness on both sides. While there were certainly signs of compromise on both sides, party allegiances were also evident. Even after the rah-rah-sis-boom-bah feeling of the meeting on Friday.

Jim McGovern, a Democrat, also said after the meeting that, “it would be foolish to just assume we’re going to go along with everything. We’re not a cheap date.”

Meanwhile, the Republicans were also there to show that they’re not just about to go along with whatever the President wants either. And in fact, the language they used could signal that talks on Friday actually went nowhere.

“This was a photo op for the President,” said Republican Tom Price after the meetings. “So be it.”

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