What Do the Parties Agree and Disagree on Concerning the Fiscal Cliff?

This entry is part 7 of 9 in the series The Fiscal Cliff Explained

Part 7 – What Do the Parties Agree and Disagree on Concerning the Fiscal Cliff?

There are 2 components in this section of The Fiscal Cliff Explained:

What Do the Parties Agree On Concerning the Fiscal Cliff?

Both parties agree that doing nothing and letting all the scheduled tax hikes and spending cuts to take effect for all of 2013 would be a terrible thing for the economy, and something they want to avoid. No one likes the sequester’s indiscriminate, across-the-board cuts, and few want to raise taxes significantly on the middle-class.

However, while they oppose the fiscal cliff’s particular form and pace of deficit reduction, the leaders of both parties still want to enact major deficit reduction that brings down the longterm deficit. Both sides agree that such a deficit plan should include both tax revenues and entitlement cuts, generally speaking. And so the negotiations are, somewhat peculiarly, focused on replacing one deficit-reduction package with another deficit-reduction package.

What Do They Disagree On Concerning the Fiscal Cliff?

They don’t agree on taxes: Democrats want to hike taxes on the wealthy by about $1.6 trillion, and they want about $1 trillion of that to come from letting the top tax marginal tax rate snap back to its Clinton-era level of 39.6 percent. Republicans oppose tax increases in general and increases in marginal tax rates in particular.

The two parties also disagree about how and where to cut spending: Republicans want to make more dramatic reforms to Medicare, Medicaid, and other entitlement programs, as well as bigger cuts to domestic discretionary spending.

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