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Obama Cuts Vacation to Tackle Fiscal Cliff [VIDEO]
President Obama has cut his holiday vacation in Hawaii short, returning to Washington to try to work out a deal on the fiscal cliff. House Republicans are putting the ball in the Senate’s court with the cliff less than a week away. What are experts most worried about?
FOX News Radio’s Jared Halpern reports from Washington:
Economists of just about every stripe warn failure to find a fiscal cliff solution by New Year’s could trigger a recession. But even if tax hikes and spending cuts are triggered January 1st, Congress could repeal and replace both retroactively within a few weeks. The bigger concern, experts caution, is the stock market.
Back in 2008, the market dropped more than 700 points in a single day when Congress voted down a bank bailout. Businesses could also hold back spending and investment, leading to layoffs.
The fiscal cliff was created as a fail-safe to reduce the deficit. Absent a comprehensive plan, taxes will go up, generating $536 billion in new revenue, and spending would shrink by more than $100 billion next year. Those spending cuts are equally divided between the military and domestic programs and, in some cases, would mean an 8% or 9% drop in funding.
Not just income tax rates go up, but a payroll tax holiday expires and the Alternative Minimum Tax expands. For the average U.S. family, the annual Federal tax bill shoots up more than $2,000.
In Washington, Jared Halpern, FOX News Radio.
WATCH more on the fiscal cliff: