Backing Off the Fiscal Cliff
President Obama's proposal to extend the Bush-era tax cuts for those making under $250,000 cuts to the heart of the controversy over what it will take to save the struggling U.S. economy.
PLEASE NOTE: THIS EDIT CONTAINS 4:3 MATERIAL The U.S. economy is in trouble. Job creation is far below what's needed; the unemployment rate is stuck above 8 percent. And President Obama is under pressure. On Monday, he proposed an extension of the Bush-era tax cuts for one year, but only on family incomes up to $250,000. SOUNDBITE: US PRESIDENT BARACK OBAMA (ENGLISH) SAYING: "Let's not hold the vast majority of Americans and our entire economy hostage while we debate the merits of another tax cut for the wealthy." But one man's tax cut is another's tax hike. Not extending the tax cuts for everyone- effectively amounts to a tax hike for high earners- something that Republican Presidential candidate Mitt Romney and his supporters say will hurt the economy: Curtis Dubay Senior Policy Analyst at the Heritage Foundation: SOUNDBITE: CURTIS DUBAY, SENIOR POLICY ANALYST, HERITAGE FOUNDATION (ENGLISH) SAYING: "If we go with President Obama's plan we'll be raising taxes on the most successful small businesses, the businesses that employ the most workers. Right now we have 13 million Americans looking for work we are in no position to be dissuading job creation any more than we are already. " Obama supporters- some of whom say the income threshold should be as high as a million dollars- argue we can't afford to maintain the cuts for everyone. Seth Hanlon, Director of Fiscal Reform at the Center for American Progress: SOUNDBITE: SETH HANLON, DIRECTOR OF FISCAL REFORM, CENTER FOR AMERICAN PROGRESS (ENGLISH) SAYING: "Well over 10 years the high end Bush tax cuts carry a cost of a about one trillion dollars when you include not just the direct costs but the extra costs of servicing the debt from those tax cuts. So that's very significant." But the fiscal cliff looms- and the consequences of inaction could be serious. Alec Young of S&P Capital IQ: SOUNDBITE: ALEC YOUNG, GLOBAL EQUITY STRATEGIST, S&P CAPITAL IQ (ENGLISH) SAYING: "With respect to the fiscal cliff, if all of the current tax cuts that we are enjoying from the Bush tax cuts, to extended unemployment benefits, to the payroll tax cut if all that were to expire as is currently scheduled on January 1st 2013, the U.S. economy would be looking at a 3.5% fiscal drag in 2013 so it would be a significant event." But given the heated political climate- it's unlikely that Obama's proposal will pass or that any deal will be reached before the new year. Bobbi Rebell, Reuters.