Date: December 31 2012
WASHINGTON: Despite intense scrutiny and the growing frustration of the American public, the US Congress failed to come up with a weekend deal to avoid the sweeping tax hikes and spending cuts known as the fiscal cliff.
The 112th Congress, which is set to become the least productive since the 1940s, now has just a day to find a solution, suggesting that anything it comes up with will be a bare-minimum patch over key elements rather than the "grand bargain" hoped for, and that the crisis will lurch on through the northern winter.
A Huffington Post analysis of records held by the US House Clerk's Office has found this Congress to be the least productive since 1947, passing 219 bills, compared with 383 passed by the previous Congress.
The members of the 112th Congress, which sits for the last time on Monday in the US, have not only created the fiscal cliff they are now seeking to avert, but they have failed to pass a budget, failed to pass basic procedural motions, failed to pass a Violence Against Women Act and most recently failed to ratify a UN treaty protecting the rights of the disabled.
Congress's lower house has voted to repeal Barack Obama's health reforms more than 30 times, despite the fact the measure would never pass the Senate, let alone be signed into law by the President.
The Republican moderate Senator Olympia Snow, who announced her retirement earlier this year in protest, said on Sunday it was a "tragedy" that Congress had failed to work together on routine matters, let alone reach the body's potential to serve the US. Congress's approval rating now sits at 18 per cent.
On Saturday night Republicans proposed a deal that would have included a reduction in some Social Security payments. Democrats declared the measure a "poison pill" and talks collapsed until Sunday, after the Republican minority leader Mitch McConnell appeared on the Senate floor and appealed to the Vice President, Joe Biden, to help "jump start" negotiations.
Republicans later pulled the measure from its demands and talks resumed.
By Sunday night it appeared that the key matter for negotiations was at what level of income the Bush-era tax cuts should be allowed to expire. Democrats have been calling for effective tax rises to begin on income earned above $US250,000.
Having won an election in which the President campaigned on increasing taxes on the wealthy rather than cutting benefits to the elderly and poor, many Congressional Democrats, as well as Mr Obama himself, are unwilling to give ground on spending cuts.
For that reason any last-minute deal that could pass the Senate is likely to include a measure that maintains the Bush-era tax cuts for all but the wealthiest Americans.
If that is the case it is not known whether Republicans in the House of Representatives would pass such a measure. Last week the Republican Majority Leader, John Boehner, had to pull a vote over his own proposal to protect all but those earning more than $1 million because he could not guarantee support from within his own members.
American businesses and individuals are now left not knowing what taxes they will be paying next week.
Should no deal be made, all the Bush tax cuts enacted in 2001 will expire, as well as those of the 2009 stimulus package cuts, pay-roll tax cuts and federal unemployment benefits for 2 million Americans.
Should the tax cuts expire, it is likely that when the new Congress sits on January 3, Democrats will simply introduce a bill that would reinstate them for all but the top 2 per cent.
Speaking on NBC's Meet the Press program for the first time since the height of the negotiations over Obamacare, the President took a tough stance, saying he had negotiated in good faith but it appeared the Republicans were more concerned with protecting high income earners than cutting the deficit.
"They say that their biggest priority is making sure that we deal with the deficit in a serious way, but the way they're behaving is that their only priority is making sure that tax breaks for the wealthiest Americans are protected," he said. "That seems to be their only overriding, unifying theme."
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