Talks over how to avoid the USA falling over the ‘fiscal cliff’ gathered pace Monday night after President Barrack Obama and House of representative Speaker John Boehner met to reach a compromise.
Mr Boehner has indicated that he would be willing to negotiate over the deals main sticking point of raising taxes for Americans earning more than a million Dollars. Obama is thought to have made a counter-offer over the issue in an effort to resolve the matter. The two men met earlier in the day to hammer out an agreement in a bid to avoid the steep tax hikes and spending reductions that are due to begin in 2013.
In a dramatic change of position the White House proposed leaving lower tax rates in place for everyone except those earning more than $400,000 and above. Up from the $250,000 threshold Obama had been fighting for. Republicans want the rate to begin after $1million.
The president’s proposal to avoid the fiscal cliff had called for $1.6tn in new tax revenue over 10 years. Mr Obama has previously insisted that he will not sign a deal that does not raise tax rates on earnings over $250,000. Boehner wants that figure to be only $1 trillion.
Boehner’s spokesman said, “Any movement away from the unrealistic offers the president has made previously is a step in the right direction,” the spokesman said, emphasizing that differences remain on spending levels in particular.
“We hope to continue discussions with the president so we can reach an agreement that is truly balanced and begins to solve our spending problem.”
Economists are warning that if no deal is agreed upon before the deadline then up to $600billion will be sucked out of the US economy, possibly sending the US back into recession and have a drastic impact on the rest of the world.
The negotiating rages on but time is running out.
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