Will the United States Go Off The Fiscal Cliff?

A few weeks ago, there seemed to be a good chance that President Obama and House Speaker John Boehner would reach the compromise necessary to avert the pending "fiscal cliff".

Boehner appeared willing to move off of the "absolutely no tax increases" stance that many House Republicans are currently espousing. According to reports, Boehner was advocating the expiration of the Bush tax cuts for those making in excess of $1 million per year in exchange for cuts to entitlement programs.

President Obama, on the other hand, has publicly said that the Bush tax cuts should expire for anybody making more than $250,000 per year. There seemed to be some room for compromise, but the two sides ran into a brick wall on the issues of entitlement cuts, the debt ceiling and emergency unemployment benefits.

As the negotiations between Boehner and President Obama bogged down, the House Speaker introduced fallback legislation known as "Plan B". The main component of "Plan B" called for the Bush tax cuts to expire for anybody making more than $1 million per year.

The House planned to vote on the "Plan B" bill, but those plans fell apart after it became apparent that the Republicans wouldn't be able to garner enough support to pass the bill in the House. With Democrats opposed to the bill, the Republicans would need wide-scale support from their party to pass the bill, which they didn't receive. This was due to the continued steadfast refusal of a number of Republicans to allow tax rates to increase.

Boehner had this to say after the tax measure bill fell apart:

"The House did not take up the tax measure today because it did not have sufficient support from our members to pass. Now it is up to the president to work with Senator Reid on legislation to avert the fiscal cliff."

This development leaves precious little time in which the "fiscal cliff" can be avoided, as Christmas is just a few days away and the "fiscal cliff" deadline is on January 1st.

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So what happens now?

Will House Speaker Boehner and President Obama pick up negotiations again between now and January 1st?

Will a smaller deal to avert the fiscal cliff be reached?

Will a deal be reached shortly AFTER January 1st?

Or, the worst case scenario - will the United States sail clear off the "fiscal cliff"? If so, what happens then?

Filed under: General Knowledge