The President and Speaker Boehner continue to discuss how to avoid the fiscal cliff, meeting as recently as yesterday afternoon. Reports state they had frank discussions about the issues at hand. If a final agreement is reached, it is expected to be a two-part deal. First, achieve savings in the short-term and alleviate the sequesters cuts by contributing to the deficit. Second, configure a plan for Congress to attain long-term savings through tax and entitlement reform in the 113th Congress.
The issues referred to as the fiscal cliff include:
Automatic cuts to spending (i.e., sequestration) included in the Budget Control Act of 2011, scheduled to begin on January 1, 2013;
The pending 27 percent cut to Medicare physician fees scheduled for January 1st;
The expiration of favorable tax provisions including the payroll tax, the Bush-era income tax rates, and the current treatment of the Alternative Minimum Tax (AMT);
Expiration of the existing unemployment insurance provisions; and
The need to again increase the federal debt limit in early 2013.