US ‘fiscal cliff’ clock ticks, parties wrangle

Republicans in the US Congress on Monday called on President Barack Obama to detail long-term spending cuts to help solve the country’s fiscal crisis, while holding firm against the income tax rate increases for the wealthy that Democrats seek.

In a further sign of tense relations between negotiators who are trying to avert a year-end “fiscal cliff” of steep tax increases and spending cuts, the White House expressed doubts that “balanced” deficit reductions can be achieved merely by limiting tax breaks and cutting spending, as Republicans propose.

The White House is already on record threatening to veto any bill that does not include income tax rate increases on the wealthy that are opposed by Republicans.

While Congress returned from its Thanksgiving holiday break amid increasing talk about long-term tax reform plans and a need to compromise, the two parties showed no signs yet of having found a way around the short-term tax obstacle necessary to head off the fiscal cliff on December 31.

“We remain at an impasse,” Senate Republican Leader Mitch McConnell of Kentucky said during a floor speech.

The lack of progress helped push financial markets down slightly, as fiscal cliff worries made investors less willing to buy stocks.

“My fear is that the can gets kicked down the road for at least a six-month period” to search for a long-term fiscal deal, said Bonnie Baha of DoubleLine Capital, an asset management firm. “The market is going to hate it, especially the stock market.”

Obama spoke with House Speaker John Boehner, a Republican from Ohio, about the budget negotiations during the weekend, as well as with Senate Majority Leader Harry Reid, a Nevada Democrat, a White House official said.

Obama spokesman Jay Carney said the president would speak with them again “at the appropriate time.”

“People in both parties agree we need a ‘balanced approach’ to deal with our deficit and debt and help our economy create jobs,” Boehner said through a spokesman. But the two parties were clearly at odds over what constitutes a balanced approach.

The fiscal cliff’s approximately $600 billion in tax hikes and spending cuts that would begin in 2013 would push the US economy back into recession, according to the non-partisan Congressional Budget Office.

A new CNN poll found that the public is now closely watching the debate unfolding in Washington over how to tame budget deficits that have exceeded $1 trillion for four consecutive years.