Boehner suggested the talks would provide Obama with an opportunity to demonstrate leadership. “This framework can lead to common ground, and I hope the president will respond today in that same spirit,” he said. “As I said on Wednesday, this is an opportunity for the President to lead. This is his moment to engage the Congress and work towards a solution that can pass both chambers. Earlier this week, the President and I had a short conversation. It was cordial. I think we both understand that trying to find a way to avert the fiscal cliff is important for our country. And I’m hopeful that productive discussions can begin soon so that we can forge an agreement that can pass the Congress.”
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Boehner also cited a newly released report from the Congressional Budget Office on the effects of going over the fiscal cliff, which highlights the contraction the U.S. economy would face in the wake of approximately $700 billion in expiring tax cuts and automatic spending reductions. According to the report, gross domestic product would drop 0.5 percent next year if the spending cuts and tax changes mandated by sequestration and the Budget Control Act were allowed to occur. The CBO also estimated that unemployment would increase to 9.1 percent from its current rate of 7.9 percent.
However, the report shows that if the fiscal cliff were eliminated without addressing current fiscal challenges, the economy would remain below its potential and unemployment would remain high. The CBO concluded that Congress should not eliminate the fiscal cliff without replacing it with a responsible, long-term deficit reduction plan.
For more information on the fiscal cliff and the expiring tax provisions, CCH is offering a new tax briefing on post-election tax policy.