Obama on the Fiscal Cliff: Taxes Are Our Top Priority
With about ten hours until the New Year on the East Coast, President Barack Obama delivered a short statement on the progress that Congress has made toward a fiscal cliff solution. Leaders from both sides of the aisle have punctuated Monday’s last-minute dialog with optimism, helping spur the markets upwards on the last day of trading in 2012.
President Obama, hoping to rally public sentiment and turn around the pessimism that built up over an unproductive Christmas week, said early in his statement: “It appears that agreement to prevent this new years tax hike is in sight, but it’s not done.”
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At about 2:48 p.m. EST, the S&P 500 was up 1.03 percent, the Dow was up 0.60 percent, and the Nasdaq was up 1.51 percent, bringing hope that the markets will end the year on a strong note after the major indices each fell nearly 3 percent in the preceding five trading days. Ten-year bond yields are up 5 basis points and Gold has climbed 1.33 percent to $1,678.00 per ounce.
Good news: there’s a tax proposal on the table
“For now, our most immediate priority is to stop taxes from going up for middle-class families,” said the President. If lawmakers fail to reach an agreement before midnight, the Bush tax cuts, the payroll tax holiday, and a number of tax credits such as those for tuition, childcare, clean energy, and unemployment will expire. The result, according to the Tax Policy Center, would be a $3,500 average increase in annual taxes per household, beginning with the new year.
Earlier reports indicate that Vice President Joe Biden and Senate Minority Leader Mitch McConnell (R-Ky.) were zeroing in on an agreement on taxes, but talks were being held up by disagreements over spending cuts. On taxes, it seems like Republican leaders have come to terms with letting the Bush tax cuts expire for individuals earning more than $400,000 per year and families earning more than $450,000 per year — somewhat of a middle-ground between Obama’s initially proposed $250,000 income level and House Speaker John Boehner’s (R-Ohio) initial concession level of $1 million….