As negotiations between the White House, House Republicans and Senate Democrats heat up over the impending “fiscal cliff,” plan advisors should expect numerous ups and downs along the way, says Brian Graff, Executive Director/CEO of NAPA and ASPPA — with the ultimate outcome far from certain.
“There are real differences in the approaches that the House Republicans would like to take and the White House and Senate Democrats would like to take,” Graff notes. House Speaker John Boehner (R-OH) would like to basically extend the Bush tax cuts and address the debt ceiling and sequestration in one fell swoop via a 12-month extension, Graff explains, and put a framework together that would make it easier to pass a tax reform measure next year.
But the White House and Senate Democrats believe they have potential leverage right now, Graff notes, which is why they’re pushing for a permanent set of new, higher tax rates for the top 2% of wage earners.
This divergence in approach may well be a recipe for deadlock. “A lot of folks are concerned that, now that negotiations are picking up post-Thanksgiving, we may go back to some brinkmanship” by negotiators, says Graff. “Play close attention — it’s going to be a real roller coaster ride.”
The onus is on President Obama, Graff believes: “It’s critical that the president leads. He’s going to have to negotiate with both sides — with House Republicans as well as Senate Democrats, who don’t want to give in on anything in terms of cutting entitlements.”
Click on Graff’s “Washington Update: December” video in the right margin for more on the fiscal cliff.
