Fiscal cliff talks were transformed into political posturing on Tuesday, after House Speaker John Boehner threw his "Plan B" on the table that would force a vote on the House floor on Thursday to extend tax breaks for families earning up to $1 million. The move left the Democrats ,who previously enjoyed having the clear upper-hand, in a tough negotiating spot.
Boehner told GOP lawmakers to expect two floor votes on Thursday, the first would include a one-year extension of the Bush-era tax rates for families earning up to $250,000, the White House's original demand, which will almost definitely fail in the House. The second vote will be Boehner's proposal of extending the cuts for families earning up to $1 million, with additional provisions for the Alternative Minimum Tax, the estate tax and investment taxes.
The White House and Democrats categorically rejected Boehner's "Plan B" Tuesday and vowed to whip their members to oppose it, challenging the speaker to come up with 218 votes to pass it on his own. If it does pass, House Republicans expect the Senate to amend it, but said it could at least serve as a legislative vehicle for a final deal. - Read more at The Fiscal Times
FITCH THREATENS A DOWNGRADE (AGAIN) Fitch ratings agency warned on Wednesday that the U.S. will lose its coveted "AAA" rating if lawmakers can't agree to a deal that reduces the deficit. S&P downgraded the federal government last year after the tumultuous talks to raise the debt ceiling brought the country close to defaulting. Here’s the open question: How much do lawmakers really fear the threat of a lost credit rating? That possibility has yet to become a major part of the cliff talks and provided little motivation previously to reach a compromise. - Read more at CNN
FISCAL CLIFF SPOOKS HOLIDAY SHOPPERS Some families hit the brakes this year on traditional holiday shopping sprees. A third of Americans, say they have cut back on personal spending as a result of the fiscal fight in Washington, according to Bankrate's December Financial Security Index. Among the pennypinchers, 42 percent were Republicans and 38 percent were Independents, compared to just 24 percent of Democrats who are either glowingly optimistic or (possibly) not up to snuff on the news. - Read more at Bankrate
ANOTHER (LACK OF) CONFIDENCE INDEX Pessimism swirls around Christmas and the New Year. The newly launched consumer confidence index developed by the Peter G. Peterson Foundation has a reading of 52, a bad sign since 100 is a neutral sentiment on the economy. Along with the index, the foundation reported that 79 percent of consumers are worried about the fiscal cliff and 89 percent believe the economy will dip back into a recession. Some 88 percent also believe unemployment will rise back above 9 percent by the end of 2013. Full disclosure: Peter G. Peterson, chairman of the foundation, also separately funds The Fiscal Times. - See the index here PGPF
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