Speaking after a White House discussion with President Barack Obama Friday on how to avert the looming tax hikes and spending cuts, U.S. Senate leaders said they are aiming to craft “fiscal cliff” legislation by Sunday.
Senate Majority Leader Harry Reid characterized the meeting between the president, Reid, Senate Minority Leader Mitch McConnell, House Speaker John Boehner and House Minority Leader Nancy Pelosi as “very positive.”
“Whatever we come up with is going to be imperfect,” he said on the Senate floor after the meeting.
“I feel confident that we have an obligation to do the best we can and that was made very clear in the White House.”
Senate Minority Leader Mitch McConnell echoed those sentiments saying the group had “a good meeting.”
It was the the first time the group has met together since November.
Obama was not planning to make a new offer, a source familiar with the meeting said.
U.S. stocks fell for a fifth straight day, dropping 1 per cent as the federal government edged closer to the “fiscal cliff” with no solution in sight.
If Congress and the president fail to reach a deal, $600 billion in tax hikes and federal spending cuts will begin to take effect on Jan. 1 with a potentially devastating impact on the economy.
If these jolts to the economy are allowed to occur, a recession could follow, economists have forecast. Consumer spending power suddenly would be reduced if the nation tumbles over the “cliff.”
On average, each U.S. household’s annual tax bill would rise by approximately $3,500; for middle-income households, by almost $2,000.
Members of Congress are increasingly looking at the period straight after the Dec. 31 deadline to come up with a retroactive fix to avoid steep tax increases and sharp spending cuts that economists have said could plunge the country into another recession.
With taxes on all Americans set to rise when rates established under former President George W. Bush expire on New Year’s Eve, lawmakers would be able to come back in January and take a more politically palatable vote to cut some of the tax rates.