White House economic report warns of fiscal cliff consequences

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November 27, 2012, 6:26 am
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(NECN/NBC News: Tracie Potts) - In Washington, the House returns from its holiday break as efforts to continue to avoid the fiscal cliff, a series of tax increases and spending cuts that kick in at the end of the year if Congress doesn't act.

But now, it looks like some republicans may be willing to back off an old pledge not to raise taxes.

The issue here is how to get people who earn over $250,000 to contribute more: raise their taxes or cut their deductions?

President Barack Obama meets with small business leaders Tuesday, continuing his push for higher taxes for the wealthy:

A new White House economic report warns if tax breaks go away, the average middle class family will owe Uncle Sam another $2,200 next year.

"Seems to be the thing that we can all agree on that middle class families should see an extension of these tax cuts," says Alan Krueger, chairman of the White House council of economic advisors.

Some prominent republicans, who've been dead set against raising tax rates on anyone, now hint they may consider other options:

"We've been open to revenue by closing loopholes, as long as it's tied to spending cuts and pro-growth tax reform that broadens the base and lowers rates," says Senator Mitch McConnell,  minority leader.

"You don't raise rates. You just cap the amount of itemized deductions that taxpayers -- it hits the wealthy," says Tennessee Senator Bob Corker.

The bottom line, republicans say, is America's borrowing too much money, trying to keep Medicare and social security afloat.

Lawmakers with the "fix the debt" coalition meet here Wednesday.

"There's gonna come a point in time when we can't borrow any more money and interest rates are gonna skyrocket," says  Oklahoma Senator Tom Coburn.

"This Congress is already one vote away from avoiding fiscal cliff," says Senator Harry Reid, majority leader.

But it’s one vote with the key players still far from agreement.

And there’s no word yet on the next White House meeting for congressional leaders to get this done.

What's the public saying? Republicans are pushing a new survey that suggests Americans are on their side.

The Winston Group survey found 65-percent of Americans agree that spending cuts and getting rid of tax loopholes and deductions is the best way to fix the deficit. Keep in mind, though, David Winston, the man behind that survey, is a republican operative close to Speaker John Boehner.

Tags: White House, congress, Senate, President Barack Obama, tax breaks, House of Representatives, business leaders, Tracie Potts, Speaker John Boehner, NBC news, fiscall cliff, senator mitch mcconell, senator bob corker, senator tom coburn, senator harry reid, winston group, david winston
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