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U.S. lawmakers resume their work Tuesday facing the major task of finding an agreement on how to deal with $600 billion in automatic tax increases and spending cuts set to take effect January 1.
Congress and President Barack Obama have seven weeks to either delay the mandated package of tax hikes and cuts to defense and domestic programs, or to find an elusive compromise to avoid the so-called “fiscal cliff”.
Obama is set to host Democratic and Republican leaders for a meeting at the White House on Friday.
Neither side wants the harsh budget measures to take place. They were set up as a way to force the lawmakers to reach a deal to address the country’s budget deficit after previous talks failed.
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Congress is also expected to address several other areas in its so-called “lame-duck” session. Those include a bill to aid farmers, legislation ending trade restrictions so that U.S. exporters can access the Russian market following that country’s entry into the World Trade Organization, and a bill excluding U.S. airlines from European Union taxes on emissions for planes flying to and from the continent.
What is the U.S. Fiscal Cliff?
- An agreement intended to force politicians to compromise and make deals.
- Without a deal by January 1, 2013, sharp spending cuts would hit military and social programs.
- Tax hikes also would go into effect.
- The combination would reduce economic activity, and could boost unemployment and push the nation back into recession
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