Congress leaders differ on 'fiscal cliff' prospects
WASHINGTON (Reuters) - The top Republican in the U.S. Congress said on Tuesday he had no confidence a divided Washington could avoid a "fiscal cliff" that threatens to push the nation into a recession, but the top Democrat voiced optimism there would be a deal.
"I'm not confident at all," House of Representatives Speaker John Boehner said, accusing President Barack Obama of failing to provide needed leadership.
Senate Majority Leader Harry Reid fired back by expressing disappointment in Boehner's comments. "I'm confident that we will reach some kind of agreement" after the November 6 presidential and congressional elections, the Democrat said.
Boehner and Reid made their remarks to reporters at separate news conferences as Congress, back to work after a five-week recess, faces a major challenge and looming deadline.
Obama and lawmakers have until the end of the year to resolve a number of fiscal issues, including whether to renew expiring income tax cuts for tens of millions of Americans.
They must also come up with about $109 billion in deficit reduction or face automatic cuts of that level beginning in January, a process known as sequestration. Over a 10-year period, the automatic spending cuts are supposed to total $1.2 trillion.
About half those spending reductions would be in defense, drawing complaints from both sides of the political aisle that such cuts would be dangerous to U.S. national security.
Economists warn that the across-the-board spending cuts coupled with letting tax cuts enacted in 2001 and 2003 expire would amount to a "fiscal cliff" that could send the ailing U.S. economy into a recession.
The Republican House this year passed legislation, rejected by the Democratic Senate, that would exempt defense from sequestration and focus all the January savings on other domestic program reductions, including social safety-net programs that Democrats want to protect.
The House and Senate also differ over tax cuts.
The House approved legislation to renew all expiring income tax cuts, while the Senate passed a White House-backed bill that would extend tax cuts only for family incomes up to $250,000.
Congress and the White House are expected to postpone action on avoiding the "fiscal cliff" until after the November 6 election.
'WE NEED TO ADDRESS IT'
"The House has done its job on both the sequester and on the looming tax hike that will cost our economy 700,000 jobs," Boehner said.
"The Senate at some point has to act," the speaker said. "And on both of these, where's the president, where's the leadership?"
House Democratic Whip Steny Hoyer said, "I'm optimistic" there will be a deal after the election, with members of both parties stepping up to meet the fiscal challenge.
Hoyer, the No. 2 House Democrat, added, however, "There won't be a deal unless it is balanced."
Democrats have demanded that any spending cuts be coupled with increases in revenue, either through tax hikes or the plugging of tax loopholes. So far, Republicans have refused to put revenues on the table.
Republican Senator Dan Coats said Congress needed to focus on the "fiscal cliff" so that it can avoid it.
"So far, there has been surprising little discussion about it," Coats said. "It's being pushed backed until after the election. We need to address it."
Coats voiced concern about talk of a possible six-month fix that would delay the need for any final decisions about the tax and spending cuts until the middle of next year.
"That would amount to another kicking it down the road, which Congress has become famous for," Coats said.
"It would place a cloud over business and investment decisions," Coats said. "If there is one word that explains why the economy is doing bad, it's uncertainty. We have too much uncertainty."
Moody's Investors Service said on Tuesday the United States might lose its triple-A debt rating if budget negotiations failed to reduce the record U.S. debt, which recently topped $16 trillion.
Rival ratings agency Standard & Poor's stripped the United States of its top ratings last year after Congress failed to come up with a long-term deficit reduction plan and political fighting brought the country to the brink of default.
Moody's rates the United States AAA, but has the country on negative outlook. That probably would not change until after Congress concludes budget talks next year, it said.