After holding his first news conference since the election, President Barack Obama sat down with CEOs from some of America’s top businesses on Wednesday to discuss strategies for dealing with the fiscal cliff. Congress began a session on Tuesday with only seven weeks on the clock before hundreds of billions of dollars in spending cuts and tax hikes scheduled at the end of the year threaten to turn a struggling economic recovery into a full-fledged recession.
Time is of the essence in finding a solution, but politics as usual will have lawmakers on both sides of the aisle lobbing grenades at each other for a few weeks before serious discussions are expected to begin.
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“We’re three weeks away from serious negotiations on the fiscal cliff,” said Potomac Research Group chief political strategist Greg Valliere to CNBC. “This is a photo-op week, next week is Thanksgiving, then lawmakers will straggle back to Washington to examine what staffers have come up with. The dominant theme in these three weeks will be trial balloons.”
The President and GOP leaders worked towards an agreement in the summer of 2011 that ultimately drowned in finger pointing. During the talks, Democrats proposed an $800 billion revenue hike that Republicans were flirting with before the figure was changed to $1.2 trillion, and progress fizzled.
With that bit of history known, Obama is slated to begin negotiations with $1.6 trillion in revenue increases on the table, a number that Republicans will probably scoff at. A sum that is more likely to be agreed on will probably be in the $1 trillion range, but the amount will ultimately be determined by two things: one, how much revenue can be gained by means that do not involve raising taxes, such as closing loop holes; two, whether or not Republicans agree to raising taxes on individuals earning over $200,000 or couples earning over $250,000.