With rising Democratic opposition to cuts in social spending and Republican leaders reiterating their opposition to raising taxes on the wealthy, talks on avoiding the fiscal cliff were at a standstill Thursday.
Officials on both sides of the debate say the political jockeying is likely to continue this week. But they warn that the details of a compromise must emerge next week if an agreement is to be reached in time.
Erskine Bowles, the co-chair of the bipartisan Simpson-Bowles deficit reduction task force, said on Wednesday that he was skeptical that a deal would be reached. Bowles put the chances of an agreement before the end of the year at roughly one in three.
“I believe the problem is that we are going over the fiscal cliff,” Bowles told The New York Times, “and I think that will be horrible.”
Bowles is right. While potential tax increases on the rich have dominated the political debate, a raft of taxes on the middle class will increase if an agreement is not reached. The scope will vary, depending on a person’s income. White House officials estimate that the average American family will pay $2,200 more in taxes next year if an agreement is not reached. But, if an agreement is not reached at all, even after the January 1 deadline, the increase could be higher, particularly for households that make over $100,000 a year. Here’s why: