US PRESIDENT BARACK Obama will meet with congressional leaders for talks at the White House later today in a bid to stop the country falling off the looming ‘fiscal cliff’.
Talks between Democrats and Republicans will get under way at the White House at 8pm Irish Time today with just four days to reach an agreement that would avert hundreds of billions of dollars of automatic tax rises and spending cuts that are due to come into effect.
Going off the so-called ‘fiscal cliff’ will lead to the US going back into recesssion next year according to most analysts.
While Democrats want to retain tax cuts for households earning less than $400,000 while raising taxes for the richest two per cent, Republicans want to preserve almost all of the tax cuts implemented under the presidency of George W Bush and want more cuts to government programmes.
Republicans control the House of Representatives and are led by John Boehner while Democrats have control of the Senate – where Harry Reid is the leader – making a resolution all the more difficult with any potential deal needing to pass both chambers before being signed by the President.
Yesterday, Obama cut short his holiday in Hawaii, returning to Washington in a bid to cut a deal with congressional leaders.
Today’s meeting is seen as the last chance to strike any sort of deal before Monday. The impact of the US going off the fiscal cliff will not be immediately catastrophic for the country’s economy.
But it is likely to have a debilitating effect on the markets with confidence in the US shattered by politicians’ inability to deal with America’s debt.
Various analysts predict that if the US goes back into recession next year and unemployment rises because of the tax rises and swingeing spending cuts it will have a knock-on effect on the global econony.