U.S. poised to go off "fiscal cliff": Senator Reid

Thu Dec 27, 2012 11:00am EST

Senate Majority Leader Harry Reid (D-NV) reacts as Sen. Charles Schumer (D-NY) (not pictured) shows a ''fiscal cliff'' chart during a news conference on Capitol Hill in Washington, December 20, 2012. REUTERS/Yuri Gripas

Senate Majority Leader Harry Reid (D-NV) reacts as Sen. Charles Schumer (D-NY) (not pictured) shows a ''fiscal cliff'' chart during a news conference on Capitol Hill in Washington, December 20, 2012.

Credit: Reuters/Yuri Gripas

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WASHINGTON, Dec 27 - Senate Majority Leader Harry Reid on Thursday warned that the United States looks to be headed over the "fiscal cliff" of tax hikes and spending cuts that will start next week if squabbling politicians do not reach a deal.

Reid, the top Democrat in Congress, criticized Republicans for refusing to go along with any tax increases as part of a budget remedy as he sketched out a pessimistic outlook.

"It looks like that is where we're headed," Reid said of the likelihood of the U.S. economy going over the "fiscal cliff" - with tax increases on most working Americans and automatic spending cuts kicking in next month.

Reid made his comments in a Senate floor speech at the opening of a post-Christmas session, adding that time was running out ahead of a December 31 deadline to act to avert the "fiscal cliff."

Reid urged House of Representatives Speaker John Boehner, the top Republican in Congress, to bring his chamber back into session and to avoid the biggest impact of the "fiscal cliff" by passing a Democratic-backed bill extending low income tax rates for all Americans except those with net household incomes above $250,000 a year.

House Republicans are expected to hold a telephone conference call on the fiscal cliff on Thursday afternoon, a House Republican aide said, adding that a schedule for returning to Washington would be discussed.

Should Congress fail to act by December 31, tax rates for all Americans would snap sharply higher, back to pre-2001 levels, and two days later, $109 billion in automatic spending cuts would start to take effect. Together, the higher taxes and lower spending would suck about $600 billion out of the U.S. economy, potentially causing a new recession in 2013.

On Wednesday, it was Boehner who urged the Democratic-controlled Senate to act first to avoid the fiscal cliff, offering to at least consider anything that the Senate produced.

Reid returned the volley on Thursday, saying that the Senate had already acted, and the Democrats' solution needs the consent of both Boehner and Senate Republican Leader Mitch McConnell.

Reid said Boehner "has just a few days left to change his mind" on the Senate bill. "I don't know time-wise how it can happen now."

(Reporting by David Lawder and Richard Cowan; Editing by Alistair Bell and Will Dunham)

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Comments (8)
AlDorman wrote:
We get military cuts and tax increases. A happy new year for sane and rational Americans!

Dec 27, 2012 10:48am EST  --  Report as abuse
Malloy wrote:
I agree, Good. Let’s go over the cliff and show the Teapublicans as they truly are. Democracy requires compromise, not pledges. The Teapublicans goal is undo all the social changes and social programs instiuted since FDR. They are trying to return to the Robber Barren Age where the worker was merely chattle. For all the talk of what the founding faters intended, the true purpose is to make the rich richer and poor poorer.

Dec 27, 2012 11:11am EST  --  Report as abuse
mikemm wrote:
This should be a no brainer. The majority of voters will blame the GOP if no deal is reached. Half a loaf (preserving tax cuts up to $250K) is still better than raising everybody’s rates. Any bridging legislation can be tweaked and amended in the months ahead, but at least put a bridge in place.

If no deal is passed, the GOP will have a hard time holding on to open seats in the next election unless they run some moderates in the primaries to beat their sitting candidates. There’s just too much voter remorse for the Tea Party and hard right wingers that talked their way in as problem solvers and now can only offer obstructionism as their solutions to real problems that cannot just be kicked down the road.

Dec 27, 2012 11:14am EST  --  Report as abuse
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