Countdown to the Fiscal Cliff – Dec 21, 2012
December 21, 2012 8:13 am GMT+0 in U.S.
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.