President Obama called congressional leaders before he left Hawaii last night searching for a way to avoid the so-called fiscal cliff. President Obama and the Senate cut short their holiday vacations to work out a last-minute deal to avoid the fiscal cliff. They have less than five days to come to an agreement before tax hikes and spending cuts kick in. Senator Majority leader Harry Reid has a plan to let tax cuts expire for households making more than $250-thousand dollars a year - along with short term spending cuts instead of the long-term cuts that would happen if there is no deal.
Negotiations between President Obama and House Republican leaders stalled last week. The House is now leaving it up to the Democratic-controlled Senate to solve the problem before the New Year deadline. In addition to the fiscal cliff, Treasury Secretary Timothy Geithner warned Congress that the U.S. is close to hitting its debt limit of $16.4 trillion dollars. Geithner said the government will take steps to allow more borrowing after December 31st. To put it in terms we can better understand analysts say the higher taxes that will come with the fiscal cliff would give the average American about 15-hundred dollars less to spend next year.