Now that we know what the fiscal cliff is all about, what are the plans for dealing with it? Below are the four approaches that have been proposed:
The Democrats’ Plan
Treasury Secretary Timothy Geithner offered the White House’s fiscal cliff proposal to Republicans in the last week of November. Although the proposal wasn’t released to the public, news reports say it was basically a reprise of Obama’s most recent budget request and contained the following items:
• End the Bush tax cuts for those making more than $250,000. The result would be $1.6 trillion in new taxes over 10 years, $160 billion a year.
• Cuts to Medicare and other entitlements over 10 years equal to $400 million, or $40 million a year.
• Additional stimulus spending of $50 billion.
• Authority to allow President Obama to to raise the debt limit without asking Congress in order to prevent “fiscal cliff”-style triggers from being put in place in the future.
• The White House also counts “savings from ending the wars in Iraq and Afghanistan” in their savings tally, even though no one has proposed maintaining war spending over the next decade at the current rate.
Reception: The Republicans rejected Obama’s plan but offered to let it be voted on in the Senate. However, yesterday Senate Majority Leader Harry Reid (D-Nev.) blocked a vote on the president’s proposal.