Some Tax Hikes, Spending Cuts Now Seen as Inevitable in January
President Obama and House Speaker John A. Boehner are continuing their talks, but key officials in both parties now believe that Washington will be unable to avoid some mix of the tax increases and automatic spending cuts mandated next month by the austerity measures known as the “fiscal cliff.”
Senior Democratic and Republican officials say the best-case scenario will be for a less ambitious deal to extend middle-class tax cuts and forestall tax hikes on most Americans.
But such a deal would still set in motion a series of steep spending cuts at some federal agencies and allow key tax provisions to expire, raising taxes for many. “I don’t know if we fall off the cliff, but I think we’re at least going to jump out of a tree,” said Sen. Lindsey O. Graham (R-S.C.).
That assessment hasn’t stopped Obama and Boehner (R-Ohio) from trying to reach a broader pact before year’s end. The two spoke by phone Friday afternoon, after news broke of the massacre at an elementary school in Connecticut, and officials in both parties confirmed that Boehner was considering allowing tax rates to rise for those earning more than $1 million annually, in exchange for cuts in entitlement programs.