President Obama met with Congressional leaders last Friday to begin working toward a deal to avoid the fiscal cliff. Reportedly, the talks had an optimistic tone, and leaders seem to be willing to reconcile their differences in the coming months. However, this was not the only development that took place at the end of last week.
On Friday, President Obama spoke on the need to replace the "fiscal cliff" with a comprehensive plan to address the nation's unsustainable fiscal path. Most importantly, President Obama announced that the White House would invite leaders from both parties, business groups, labor and civic groups from across the country for a meeting this week to begin working toward a compromise.
The United States Conference of Mayors has written a letter signed by 149 mayors across the country, a bipartisan collection including the likes of Philadelphia Mayor Michael Nutter, New York Mayor Michael Bloomberg, and Sacramento Mayor Kevin Johnson. The letter urges Congress to replace the sequester with a bipartisan, comprehensive deal that gradually stabilizes debt and puts it on a downward path as a share of the economy.
Yesterday, the House Ways and Means Committee and te Senate Finance Committee held a joint hearing on tax reform and the tax treatment of capital gains. Base broadening tax reform with the payoff of lower rates is one of the key components of both the Simpson-Bowles and Domenici-Rivlin plans. But in order to get the lower rates in a fiscally responsible way, everything must be on the table, and that includes capital gains.
On Bloomberg Government's "Capitol Gains" show, Sen. John McCain (R-AZ) endorsed at least the Simpson-Bowles outline as the starting point for negotiations. He is quoted as saying "Everybody knows what the solution is, and that’s Simpson-Bowles...We are prepared to support it as an outline."
Even as lawmakers call for broadening the tax base, it seems like they keep proposing to narrow it. In the latest edition, there appears to be bipartisan support for new legislation to exempt Olympic athletes from paying taxes on their winnings. Sen.
The Senate Finance Committee will hold a mark-up of the Family and Business Tax Cut Certainty Act tomorrow at 10 am. The Act would retroactively extend the Alternative Minimum Tax patch and many temporary "tax extenders" through 2012 and extend just the extenders through 2013.
The Council on Foreign Relations has joined in on those warning of the dangers of the fiscal cliff due to hit early January and unsustainable rising levels of debt. The helpful "backgrounder" piece explains both the domestic, national security, and economic consequences of the cliff as well as some context to how we got to this point.
Yesterday the Senate voted on two highly polarized tax plans, with a Democratic version passing 51-48 while the Republican supported bill failing to pass 45-54. Neither were paid for—the Republican plan cost $405 billion and the Democratic plan cost $250 billion ($368 billion including excluded elements)—nor took any initiative on long-term deficit reduction.