Fiscal Cliff Nears as Congress Hopes for Compromise

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In the wake of the 2012 election, America is coming to grips with one of its biggest fears: the so-called "fiscal cliff" headed our way Jan. 1.

Congressional aides call it "Taxmageddon" because it requires such a sharp cut in the deficit that the economy could contract.

The day after the election investors dumped stocks in the sharpest sell-off of the year. Some say Wall Street is venting its worries about problems ahead in Washington and overseas.

What will happen if Congress does not act on the coming tax hikes before the end of the year? Bill Frezza, fellow with the Competitive Enterprise Institute, has more, on CBN Newswatch, Nov. 8.

The so-called fiscal cliff approaching on Jan. 1 is a mix of tax hikes and spending cuts that would equal $800 billion next year, if allowed to stay in effect.

"It's $500 billion of higher taxes just in 2013 alone," Curtis Dubay, a senior analyst in tax policy at The Heritage Foundation, told CBN News.

"A tax hike of that size for just one year is simply unprecedented," he said. "It's going to take an enormous chunk of the economy out of the hands of the businesses and people and families that earned the income and give it to Congress to spend."

But on Wednesday the first signs of daylight in a long time glimmered as House Speaker John Boehner hinted at a compromise.

"Mr. President, the Republican majority here in the House stands ready to work with you," Boehner said.

In fact, the speaker is now promising to consider higher taxes "under the right conditions." Those conditions would include a revamped tax code with fewer loopholes.

"We want you to succeed," Boehner said. "Let's challenge ourselves to find the common ground that has eluded us. Let's rise above the dysfunction and do the right thing."

The speaker is also suggesting that Congress use its upcoming lame-duck session to begin talks and move quickly to avoid a real nightmare on Jan. 1.

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Heather Sells

Heather Sells

CBN News Reporter

Heather Sells enjoys reporting on a variety of issues for CBN News. Some of her recent stories have focused on religious liberties, technology, AIDS, overseas missions, domestic trafficking, and politics.  Follow Heather on Twitter @SellsHeather and "like" her at Facebook.com/HeatherSellsCBNNews.