The clock is ticking for Congress to reach a deal to keep the nation from going over a “fiscal cliff.”
The term refers to about $500 billion in tax cuts that will expire and $110 billion in automatic spending cuts that will kick-in on January First. UW-Madison political scientist David Canon says failing to reach a deal before then could launch the nation into another recession, comparing the sudden loss of over $600 billion in the economy to a “reverse stimulus.”
Canon says a key sticking point in the debate is what to do with the Bush tax cuts. Many Democrats want to keep those reductions for the majority of Americans, but allow them to expire for the top two percent. Republicans want to maintain the cuts for everyone, and argue cuts in other areas are needed instead.
Canon says the Obama administration maintains that the president’s reelection shows the American people support the plan being pursued by Democrats.
If the lame duck Congress is unable to reach a deal before the end of the year, Canon says lawmakers could choose to delay a decision until the next session by creating a “bridge” agreement. However, he says any extension would likely keep the next Congress on a short leash and could require a final decision by the end of January.
AUDIO: Andrew Beckett reports (1:00)