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House of Representatives postpones fiscal cliff resolution
Posted On 02 Jan 2013
After U.S. President Barack Obama announced 5 weeks ago the possibility of fiscal cliff, i.e., the general increase in taxes that would be accompanied by strong public spending cuts, the last-minute agreement early today at Washington against the fiscal cliff made by both Democrats and Republicans, which was ratified by 89 of 97 senators, has stalled again in the House of Representatives, which declared a recess until Thursday to discuss a solution to the crisis.
89 of 97 senators approved the bill to avoid fiscal cliff before it got stalled again by the House of Representatives.
The approved project consisted in the avoidance of $ 600.000 million in tax hikes and spending cuts.
Such pre agreement, which extends tax cuts for two months and keeps the tax cuts for individuals making less than $ 400,000 or couples with incomes below $ 450,000 from a current 35% to a 39.6% so the country does not fall into the cliff, is currently being considered by the House of Representatives, who will decide if the project is approved or changed.
Vice President Joe Biden met with Democratic lawmakers on Capitol Hill to explain the terms of the pre agreement, which consists of 157 pages.
However, the House of Representatives threatens to send the project back to the Senate with a package that would include more cuts. “The discussion time is running out. It is time we vote this, but unless no one votes in the chamber, all will be in vane and the American people are waiting for a resolution so that we do not fall into the cliff, “said Nacy Pelosi, Democratic House representative.
Expert economists warn that if the disagreement continues in the first half of January, it could generate turbulence in the stock market. If disagreement persists for months, the impact would be much more severe and some analysts fear that the combination of $ 600,000 million dollars of tax gap could bring the U.S. economy back into recession, and according to the Congressional Budget Office, these changes could increase the level of unemployment above 9%.
