Politics

December 27, 2012

No deal in sight as 'fiscal cliff' nears

No negotiations have been set, and Republican leader John Boehner said only God knows how Republicans and Democrats will reach a deal.

The Associated Press

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John Boehner
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Speaker of the House John Boehner, R-Ohio, speaks to reporters about the fiscal cliff negotiations at the Capitol in Washington, Friday, Dec. 21, 2012. Five deays from the U.S. going over the 'fiscal cliff,' there's no deal in sight. (AP Photo/J. Scott Applewhite)

President Barack Obama greets Gov. Dannel Malloy during his arrival at the start of an interfaith vigil for the victims of the Sandy Hook Elementary School shooting on Sunday, Dec. 16, 2012 at Newtown High School in Newtown, Conn. Five days before the U.S. goes over the "fiscal cliff," a deal between Republicans and Democrats appears far away. (AP Photo/The Hartford Courant, Stephen Dunn, Pool)

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Amid the standoff, Geithner advised Congress on Wednesday that the administration will begin taking action to prevent the government from hitting its borrowing limit. In a letter to congressional leaders, Geithner said accounting measures could save approximately $200 billion.

That could keep the government from reaching the debt limit for about two months. But if Congress and the White House don't agree on how to avoid the "fiscal cliff," he said, the amount of time before the government hits its borrowing limit is more uncertain.

"If left unresolved, the expiring tax provisions and automatic spending cuts, as well as the attendant delays in filing of tax returns, would have the effect of adding some additional time to the duration of the extraordinary measures," he wrote.

Whenever the debt ceiling hits, however, it is likely to set up yet another deadline for one more budget fight between the White House and congressional Republicans.

Initially, clearing the way for a higher debt ceiling was supposed to be part of a large deal aimed at reducing deficits by more than $2 trillion over 10 years with a mix of tax increases and spending cuts, including reductions in health programs like Medicare. But chances for that bargain fizzled last week when conservatives sank Boehner's legislation to only let tax increases affect taxpayers with earnings of $1 million or more.

Obama and his aides have said they would refuse to let Republicans leverage spending cuts in return for raising the debt ceiling. But Republicans say the threat of voting against an increase in the limit is one of the best ways to win deficit reduction measures.

Another potential showdown is pending. A renewed clash over spending could come in late March; spending authority for much of the government expires on March 27.

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