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Countdown to the Fiscal Cliff – Dec 21, 2012

December 21, 2012 8:13 am GMT+0  in U.S.

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Hard won concessions wrested from each other by Obama and Boehner faced a serious setback Thursday when Republicans cancelled a vote on Boehner’s Plan B legislation.

Boehner’s plan proposed to raise taxes on the rich, those earning over $1 million per annum. Though the bill was largely symbolic, as it would have passed in the Republican controlled House but would have failed in the Democrats led Senate, its abandonment lays bare the immense opposing pressures that stand in the way of a resolution.

A chastened Boehner acknowledged the bill did not have the required support from amongst his own members, and put the ball in Obama’s court, asking him to come up with suitable legislation to avoid the impending financial catastrophe.

Both Obama and Boehner ultimately need the support of their party members to resolve the deadlock. Republicans have traditionally opposed higher taxes and defence cuts. Democrats loathe cutbacks on welfare spending such as healthcare and Social Security pensions.

Yet the country’s massive fiscal deficit can be resolved only by taking these self-same bitter pills.

The news of the turmoil sent investors across the world scurrying to seek shelter in the dollar and yen.

Action now shifts to next week when the House and Senate will reconvene.

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Avatar of Saul Griffith

Saul Griffith is an investor and trader in stocks, commodities and forex, writing under a pen name. Saul has professional accounting qualifications and extensive experience in industry and the financial markets. He also has an abiding interest in breaking news that could be a harbinger of new trends and give insight into an instrument’s potential for providing value, growth or yield. Additionally, he keeps abreast of technology and political developments – in his opinion these are areas which could help shape global recovery from the current turmoil. Connect the author on Google: +Saul Griffith.

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