Story Summary

The U.S. ‘fiscal cliff’

Automatic tax increases and draconian spending cuts will take effect at the end of 2012 unless Congress and President Obama can reach a deficit-reduction deal beforehand. If they fail, the government will go over the “fiscal cliff” — a $500 billion hit to the economy that analysts fear could push the country back into recession.

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milkWASHINGTON — With Congress spending all its time trying to avert the fiscal cliff, a slew of other legislative matters are going unattended. One of them is the agriculture bill which, if not addressed, could lead to a doubling of the price of milk early next year.

It works like this: In order to keep dairy farmers in businesses, the government agrees to buy milk and other products if the price gets too low. The current agriculture bill has a formula that means the government steps in if the price of milk were to drop by roughly half from its current national average of about $3.65 a gallon.

Problem is, the current bill expired last summer, and Congress had been unable to agree on a new one. Several protections for farmers have already expired, and several more are set to do so over the next few months. One of them is the dairy subsidy, which expires Jan. 1.

For more on this CNN Money story, click here.

obama-voices-support-for-approving-r74WASHINGTON — In the aftermath of House Speaker John Boehner’s defeat on his “Plan B” tax plan, President Obama offered a scaled-down, stopgap budget proposal Friday afternoon designed to avert tax increases and spending cuts due to take effect next month.

Obama’s latest proposal would raise taxes on wealthier Americans, extend jobless benefits for 2 million Americans and lay unspecified groundwork “for further work on both growth and deficit reduction.”

Before leaving for his home state of Hawaii for a short Christmas vacation, the president spoke with Boehner on the telephone and met with Senate Democratic leader Harry Reid of Nevada. Then Obama delivered brief remarks before reporters in the White House press room.

The new offer appeared to be a rollback of proposals Obama made in talks that Boehner broke off earlier in the week.  Obama did not explicitly say so, but he again wants to raise taxes on all household income over $250,000 — his initial position — and to temporarily postpone spending cuts that are scheduled to begin in January. He would keep tax rates the same on the first $250,000 for families and $200,000 for individuals.

The president ignored shouted questions from reporters after delivering his remarks.

Earlier, during negotiations with Boehner, R-Ohio, Obama had offered to extend the George W. Bush  ax cuts on income up to $400,000 and had offered spending cuts, including changes in the inflation adjustment for Social Security that angered liberal Democrats.

Obama said the latest plan was designed to allow leaders to reach an agreement that Congress  could vote on after Christmas and that he could sign into law before Jan. 1.

“It’s that simple,” he said. “In this Congress, laws can only pass with support from Democrats and Republicans. And that means nobody gets 100% of what they want. Everybody has got to give a little bit, in a sensible way.  We move forward together or we don’t move forward at all.”

That, of course, has always been the case, and there were no indications that progress would be easy in the final 10 days before the fiscal cliff deadline.

Obama’s remarks were his first in public on the stalled budget talks since opposition from conservative House Republicans dealt Boehner a severe setback Thursday night, forcing the speaker to abandon his “Plan B” tax initiative and diminishing prospects that a deal can be reached.

Boehner’s office responded Friday evening with a statement that echoed combative comments he made at a Capitol news conference earlier in the day.

“Though the president has failed to offer any solution that passes the test of balance, we remain hopeful he is finally ready to get serious about averting the fiscal cliff,” Boehner spokesman Brendan Buck said in an emailed comment. “It is time for the Democratic-run Senate to act, and that is what the speaker told the president tonight.”

The New York Times’ Jonathan Weisman reported that Reid would introduce the stopgap measure only if Republican leader Mitch McConnell agreed not to filibuster it on the Senate floor.  McConnell, asked Friday whether he would allow the proposal to come up for a vote, said, “Merry Christmas,” and stepped into a waiting elevator.

Obama said again that he had compromised with Republicans during the budget talks, meeting them “halfway on taxes” and “more than halfway on spending,” conclusions that Republicans strongly dispute.

The president said his new proposal was “an achievable goal.” Left unsaid was that the new offer contained no spending cuts at all.

Obama said solving the nation’s fiscal problems might require “several different steps,” a tacit acknowledgment that the grand bargain he had hoped to strike with Boehner is now a remote possibility, at best.

– Paul West, Los Angeles Times



boehner1WASHINGTON — House Speaker John Boehner’s proposal to avert the looming fiscal cliff’s automatic tax increases failed to curry enough Republican support Thursday night, after which Congress left for the holiday with no clear end in sight in the high-stakes debate.

Boehner said earlier Thursday that he was confident that his so-called Plan B — which would extend tax cuts that are set to expire at year’s end for most people while allowing rates to increase to 1990s levels on income over $1 million — would pass the House, and in the process put pressure on President Barack Obama and the Democratic-controlled Senate. But his gambit seemed in doubt earlier Thursday as Republican leaders struggled to get most all their members to sign on — even enlisting senators like Sen. Rob Portman, to work the House floor — knowing the chamber’s Democrats oppose it.

Then, around 8 p.m., House Majority Leader Eric Cantor announced that the measure would not go up for a vote as planned.

“The House did not take up the tax measure today because it did not have sufficient support from our members to pass,” Boehner said in a statement. “Now it is up to the president to work with Senator (Harry) Reid on legislation to avert the fiscal cliff.”


To read the entire CNN article and watch a video, click here.

john-boehner-foxWASHINGTON — Negotiations to prevent the year-end budget crisis accelerated Monday as President Obama and House Speaker John A. Boehner convened privately at theWhite House in what was widely regarded as a sign that a deal could be within reach.

Differences remain, but the quickened pace of the talks, with new offers from both sides, suggested a serious effort to cut through the partisan divide and strike an agreement.

Obama made a counteroffer that brought the two even closer together. The president offered to raise rates only on income above $400,000, according to a source familiar with the talks who was not authorized to speak publicly about the negotiations.

For more on this LA Times story, click here.

obama8WASHINGTON — The White House on Monday dismissed a Republican counteroffer to avert the so-called fiscal cliff  as failing to “meet the test of balance” by resisting higher tax rates for the wealthy, a point that remains a key hurdle in the impasse over spending and revenues.

Dan Pfeiffer, the White House communications director, said in a statement that what congressional  Republicans had billed as a “good-faith effort” to move toward compromise contained “nothing new” and offered no specifics on how they’d achieve revenue targets included in the plan.

“Until the Republicans in Congress are willing to get serious about asking the wealthiest to pay slightly higher tax rates, we won’t be able to achieve a significant, balanced approach to reduce our deficit,” Pfeiffer said in the statement, released two hours after details of the GOP offer emerged.

Republicans greeted the White House response as a demonstration of “how unreasonable it has become.”

“If the president is rejecting this middle ground offer, it is now his obligation to present a plan that can pass both chambers of Congress,” said Brendan Buck, a spokesman for House Speaker John Boehner, R-Ohio.

The Republican plan would raise $800 billion through an overhaul of the tax code, coupled with $600 billion in cuts to health entitlement programs, an additional $200 billion from “reforms” to Social Security, and half a trillion dollars in other spending cuts. They said the proposal was modeled after suggestions that Erskine Bowles, former White House chief of staff in the Clinton administration and co-chairman of President Obama’s  debt commission, made to a congressional committee a year earlier.

But Bowles released his own statement distancing himself from the GOP offer, which he said “does not represent the Simpson-Bowles plan, nor is it the Bowles plan.”

– The Los Angeles Times

To read this entire L.A. Times article, click here.

unemployedOLYMPIA – Up to 60,000 people in Washington will be kicked off of unemployment benefits when the federal Emergency Unemployment Compensation program ends on Dec. 29, if the Congress and president don’t reach agreement in the ‘fiscal cliff’ talks, the state’s Employment Security Department said Monday.

Since being activated in July 2008, the program has paid more than $5.6 billion in federally funded unemployment benefits to more than 407,000 jobless workers in this state, the department said.

During much of the recession, most unemployed workers could qualify for up to 99 weeks of benefits, including 26 weeks of regular benefits, 53 weeks of emergency unemployment compensation (EUC) and 20 weeks of extended benefits – paid in that order.

Due to the state’s improved unemployment rate, extended benefits shut off last April, and congressional action has reduced emergency (EUC) benefits to a maximum of 37 weeks. After Dec. 29, only regular benefits will be available for most Washington workers.

Although Congress has extended the EUC program 10 times in the past four years, there’s currently no indication it will be reauthorized again. If Congress and the President approve another extension, Employment Security will automatically notify anyone who claimed EUC during one or more weeks in December.

Over the next few weeks, Employment Security will send emails, robocalls and direct mail to recipients reminding them the program is ending, the department said.

A 4 1/2 -year-old program of emergency federal jobless assistance is scheduled to expire Dec. 29 — unless Congress and President Obama agree to keep it going.

Nationwide, about 2 million people face a cutoff in unemployment benefits, estimated to cost $30 billion in the coming year.

“There’s going to be millions of us who, basically, will be out in the streets,” said Lis De Bats, 54, an Agoura Hills, Calif., resident laid off in January from a job as a new-home sales manager. “I’d lose my home and everything that goes along with it. I’ve used up all my resources.”

Although the federal budget debate has prompted worries in many sectors of the economy, the threat to these emergency benefits is especially nerve-racking to those with no other means of support.

And the benefits are important not just to needy individuals and families but also to economically hard-pressed communities, economists say.

– Marc Lifsher, Los Angeles Times

To reach the full L.A. Times article, click here.

SEATTLE — Graduating high school is a huge milestone in a child’s life, but in Washington, one in four kids will never receive their diploma.  Washington ranks 32nd in the nation, tied with states such as West Virginia and Utah for graduation rates.

The 76% graduation rate is the most recent statistic calculated by the state for the 2010-2011 school year.

“The graduation rates are really scandalous.  In some schools the graduation rate is less than 50%,” said Paul Guppy, of the Washington Policy Center.

In others, it’s even worse.

At  Spanaway Lake High School for example, only 30% of seniors were eligible to graduate in the spring of 2011.

Guppy thinks there are a few reasons why.

“Local principals are not in control of their budgets so they can’t hire the best teachers.  It’s all controlled centrally. Also, only 60 cents of every education dollar reaches the classroom,” said Guppy.

When it comes to dollars and cents, districts across the state have been hit hard the past four years with deep budget cuts.

“When you’ve had cuts for ongoing years, you get to the point where there is no low-hanging fruit anymore; it’s every cut that comes along that really cuts to the bone,” said Chris Loftis, of the Kent School District.

In Kent, the district cut $13 million for the 2011-2012 school year and had to get rid of 100 staff members.  Now more cuts could be on the way in the form of federal dollars if Congress and the president can’t agree on a deficit-reduction page by Jan. 1.

If they don’t make a deal, and steep federal cuts take place, it would mean a loss of $49.6 million in education funding statewide for Title I and II programs for things such as free and reduced lunch, literacy programs and help for special needs students.

“Children are absolutely reliant on this money. The problem is $49 million is a drop in the bucket as far as Congress is concerned,” said Guppy.

State Schools Superintendent Randy Dorn thinks the situation could be even worse.

“If we go off the (federal) fiscal cliff, it’s going to be much more devastating than $49 million because the economy will tank and our budget will go in a deep recession like it did four years ago.  It wouldn’t be $49 million; it would be half a billion dollars and devastating to students in our state,” said Dorn.

The federal cuts could mean a loss of at least $2 million for the Kent School District. It amounts to 10% of school districts’ budgets, with 70% coming from the state and 20% from local levies.

WASHINGTON – With “fiscal cliff” negotiations appearing to be at a standstill, President Obama is again employing campaign-style tactics to increase pressure on congressional Republicans to compromise on a deficit-reduction deal.

Meanwhile, House Speaker John Boehner’s office announced Tuesday that congressional Republicans will hold a series of events in Washington and home districts across the country with small business owners to sell Obama’s tax policy as a threat to new jobs.

While aides on both sides have been talking, no follow-up meeting between Obama and congressional leaders has been scheduled after their initial post-election discussion on Nov. 16.

Failure to reach a deal means tax increases and deep spending cuts take effect in five weeks, a scenario analysts fear could push the country back into recession.

Instead, Obama met Tuesday with small business owners, the first in a series of events this week intended to highlight his push for raising taxes on the wealthiest 2% of Americans while maintaining current rates for everyone else.

On Wednesday, Obama meets with the chief executives of major corporations, while congressional Republicans and Democrats will talk separately with deficit-reduction gurus, including former White House Chief of Staff Erskine Bowles and Maya MacGuinneas of the Committee for a Responsible Federal Budget, a bipartisan group advocating fiscal reform.


To read the full CNN article, click here.