Obama returns to White House for 11th-hour fiscal cliff efforts
US president Barack Obama is cutting his Christmas holiday short to return to Washington today in a final effort to solve the fiscal-cliff budget crisis before the year-end deadline.
The White House yesterday said the president would leave Hawaii as he attempts to revive stalled talks that are being closely watched around the world.
With just days to go until the fiscal cliff deadline, US politicians return to work today with no specific Bill on the schedule of either the Senate or House of Representatives to deal with the crisis.
Without a solution, tax rates will rise across the board as spending cuts of $110 billion (€83 billion) are imposed and two million people will lose their long-term unemployment benefits.
Economists have warned the US will go back into recession if a deal is not reached, a situation that would create a tough backdrop for the rest of the world.
US stock markets opened marginally higher yesterday, cheered by reports that the president had cut short his vacation and by positive news on the housing market.
The S&P/Case Shiller composite index showed house prices in 20 US cities rose 4.3 per cent year-on-year in October.
The price rise was the biggest in two years, according to news agency Bloomberg, and beat forecasts that predicted it would show a 4 per cent increase. Market analysts are expecting a sell-off of shares if a budget deal is not reached soon.
Federal Reserve chairman Ben Bernanke, the Congressional Budget Office, business leaders and economists have all warned that failure to find a resolution threatens the US’s fragile economic recovery.
After the collapse of talks with Republican leader John Boehner, the House speaker, the president has turned to the Senate in the hopes of passing a deal.
Mr Obama said last week that he would like to see a temporary extension of tax cuts for all those earning less than $250,000 and an extension on unemployment benefits while Congress continues its debate.
Leading Republican senators, including Kay Bailey Hutchinson of Texas and Georgia’s Johnny Isakson, have called for a patch solution and compromise.
But even in the Democrat-controlled Senate, Mr Obama faces stiff opposition.
Republicans have rejected a plan that would have left tax rates in place for all but those with incomes above $1 million.
Mr Boehner’s own plan was brought down by a bloc of conservatives ruling out any tax increases whatsoever.
To win approval in the Republican-controlled House, Mr Obama would need a rare bipartisan vote with at least 26 Republicans joining all 191 Democrats.
Stock exchange open
The New York Stock Exchange was open yesterday. However, stocks fell for a third straight day dragged lower by retail stocks after a report showed consumers spent less in the holiday shopping season than last year.
Trading was light, with volume at a mere 4.01 billion shares traded, well below the daily average so far this year of about 6.48 billion shares.
The day’s volume was the lightest full day of trading so far in 2012.
– Guardian service/Bloomberg