US President Barack Obama has called congressional leaders to talks at the White House to try to stop the US falling over the "fiscal cliff".
Republicans and Democrats have only four days to reach an agreement before hundreds of billions of dollars of tax rises and spending cuts take effect.
Reports say Mr Obama will propose a smaller deal aiming to avert disaster.
Analysts say sliding over the "cliff" could tip the US into recession and set back the global economic recovery.
President Obama cut short his holiday in Hawaii to resume the negotiations, and is due to host the White House talks at 15:00 EST (20:00 GMT).
New optimism?Reports ahead of the meeting suggested the president would propose a limited package including the renewal of most expiring tax cuts, and a delay or replacement of some spending cuts.
Unconfirmed details of the plan were accompanied by newly upbeat rhetoric from some senators.
"I'm getting a little more optimistic today. Sometimes it's darkest before the dawn and there are two good signs for optimism today," senior Democrat Chuck Schumer told NBC's Today show.
Republican Jon Kyl told Bloomberg News: "Everybody recognises we're either going to get something in the next few hours or not. There's no more posturing time left."
Mr Obama's plans to increase taxes on the wealthiest Americans have remained a point of division between the two parties since he won re-election in November.
The president was tax cuts renewed for those earning under $400,000 (£250,000), with tax rises on the richest 2% in order to rein in deficit spending.
But many Republicans oppose new taxes as a matter of principle, and are demanding cuts to what they see as deficit-inflating public spending, putting at risk healthcare and welfare benefit schemes popular with Democrats.
An alternative plan proposed by House Speaker John Mr Boehner - which would have seen taxes rise only on those earning over $1m - failed in the House of Representatives late last week.
Mitch McConnell: No "blank cheque" to avert the fiscal cliff
Speaking on Thursday, the Democratic majority leader in the Senate, Harry Reid, said he thought a deal was unlikely. Later, Senate Republican leader Mitch McConnell said his colleagues were unwilling to sign a "blank cheque".
"Hopefully there is still time for an agreement of some kind that saves the taxpayers from a wholly preventable economic crisis."
In the Senate chamber on Thursday, Mr Reid said the requirement to get at least 60 of 100 votes to move to a vote on any legislation almost certainly doomed any new plan unless Republicans gave it strong backing.
"It looks like that [the fiscal cliff] is where we're headed," Mr Reid said.
Cuts and benefits
"It looks like that's where we're headed," Harry Reid said of the fiscal cliff
The term fiscal cliff refers to the combination of almost $600bn (£370bn) of tax rises and spending cuts due to come into force on 1 January if Congress does not pass new legislation.
Sweeping tax cuts passed during the presidency of George W Bush will expire, eventually affecting people of all income levels, and many businesses.
Other tax cuts and benefits to expire include:
- A 2010 payroll tax cut, the expiration of which would prompt immediate wage-packet cuts
- Benefits for the long-term unemployed
- Compensation for doctors treating patients on federal healthcare programmes
- Inheritance taxes are also likely to be affected if no deal is reached.
In addition, spending cuts mandated by a law passed to break a previous fiscal impasse in Congress will come into force, affecting both military and domestic budgets.
The cuts are expected to affect federal government departments and the defence sector, as well as hitting unemployment insurance and veterans' support.
How the Bush tax cuts were brought in |
||||||||
|---|---|---|---|---|---|---|---|---|
| Tax year | 1993-2000 | 2001 | 2002 | 2003-2008 | 2009-2012 | 2012 tax brackets | 2013 scenarios | |
| Tax cuts expire | Tax cuts expire for top incomes | |||||||
|
Source: Tax Foundation, IRS. Tax brackets shown for unmarried individuals |
||||||||
|
President |
Bill Clinton |
George W Bush |
Barack Obama |
|||||
|
Bottom rate |
15% |
10% |
10% |
10% |
10% |
Up to $8,700 |
15% |
10% |
|
15% |
15% |
15% |
15% |
$8,700-$35,350 |
15% |
|||
|
28% |
27.5% |
27% |
25% |
25% |
$35,350- $85,650 |
28% |
25% |
|
|
31% |
30.5% |
30% |
28% |
28% |
$85,650- $178,650 |
31% |
28% |
|
|
36% |
35.5% |
35% |
33% |
33% |
$178,650-$388,350 |
36% |
33% or 36%* |
|
|
Top rate |
39.6% |
39.1% |
38.6% |
35% |
35% |
Over $388,350 |
39.6% |
39.6% |
|
*President Obama has previously called for the tax cut to expire for those earning over $250,000 |
||||||||
No comments:
Post a Comment