GOP proposes new 'fiscal cliff' offer to Obama

December 3, 2012 9:40:42 PM PST
There is less than a month to go until the United States could face some massive spending cuts and tax increases known as the fiscal cliff. On Monday, Congressional Republicans put forward their alternative to the president's plan, but currently we are no closer to a deal.

It's been 16 days since the president and Congressional leaders met to talk about avoiding the fiscal cliff. And in that time...nothing much has moved. Now we've got three weeks and change and the cost of failure will be felt by everyone.

At San Francisco's Cafe de Stijl owner Fredy Tamraz has been watching the fiscal cliff creep closer and hoping for a resolution.

"Because if they don't, it's going to be really tough," said Tamraz.

Tamraz is talking about his employees who would see their income taxes increase by a couple of thousand dollars.

"Cost of living is really high and it's tough to make it, especially in a city like San Francisco," said Tamraz.

If Congress and the president can't reach an agreement, incomes taxes will go up on nearly all Americans, the average family will be paying an extra $2,000 to $2,400 a year.

And the automatic spending cuts means, cuts to education, transportation, research and development. There is also s a proposal to up airline fees which could raise $1 billion.

Cutting back on who receives food stamps could bring in another $4 to $16 billion over 10 years. Eliminating Saturday delivery of the mail could save $16 billion. And $55 billion in cuts to military spending would certainly hit California.

"Defense and aerospace is a big part of Southern California's economy, so those cuts would definitely effect there," said H.D. Palmer from the California Department of Finance.

Monday afternoon Speaker of the House John Boehner, R-Ohio, delivered the GOP's proposal, which would reduce the national debt by $2.2 trillion, including $800 billion in new tax revenue, but would leave the Bush tax cuts for the top two percent in place.

At a photo op Monday the president ignored reporters' questions about that Republican plan, but later in a statement the White House rejected it.

ABC7 News political analyst professor Bruce Cain, Ph.D., believes a deal will be struck before the deadline and it will be the Republicans that give ground.

"I think this time around Obama has learned from his past mistakes and more importantly, he has the advantage that if he does nothing he's in better shape than the Republicans are," said Cain.

Cain says Congressional Republicans are holding the middle class tax cuts hostage in order to force the president's hand. The problem, of course, is the GOP cannot really afford to carry out that threat if they are blamed for raising everyone's taxes in order to protect the rich, it would put the Republican Party in a very dark hole.


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