U.S. leaders remain divided over contentious year-end financial issues even as the House of Representatives gets set to vote Thursday on a Republican plan to retain a tax break for all but the wealthiest of American taxpayers.
The Republican leader of the House, Speaker John Boehner, is trying to win support for extending a tax cut for all American workers except those earning more than $1 million a year. Some of Boehner's Republican colleagues oppose his plan, saying they think everyone should get the tax cut.
But in a brief statement Wednesday, Boehner predicted victory. "Tomorrow, the House will pass legislation to make permanent tax relief for nearly every American -- 99.81 percent of the American people."
Even if the House approves Boehner's plan, however, leaders in the Democratic-controlled Senate said it has no chance in that chamber, and President Barack Obama says he would veto the measure if Congress did pass it.
Obama is calling for extending the tax break only up to the $400,000 level. The president says he and Boehner were relatively close to an agreement earlier in the week on a compromise to avert what Washington is calling a "fiscal cliff," $500 billion in mandated spending cuts and tax increases that would affect almost all American workers starting January 1.
The president, a Democrat, said he and Boehner are "several hundred billion dollars" apart on reaching a deal, and that his Republican opponents in Congress should "take the deal."
Mark Vitner, the senior economist at Wells Fargo bank, said in an interview with VOA that both sides are engaging in "political theater," but that a compromise is likely to end up closer to the president's position.
“The president won in November, so I think we’ll see the ultimate solution is going to be closer to $400,000 than $1 million," said Vitner. "I think that’s what the compromise will be. It will probably be a half a million.”
After several negotiating sessions with Boehner, the president reduced his demand for more taxes over the next decade from $1.4 trillion to $1.2 trillion. He also says he would agree to a Republican call to curb spending for government pensions for retired workers by changing the way annual increases in the payments are calculated.
Vitner said he thinks the broad outlines of a deal will be completed around Christmas, next Tuesday, but not voted on until a day or two after the new year. That way, he said, Republican lawmakers will be able to vote to cut taxes that had gone up as the calendar turned to 2013.
The economist says the United States might go over the fiscal cliff, but not in a significant way. “Technically we’re going to go over the fiscal cliff…I just don’t see us bungee jumping over the fiscal cliff.”
Even as they appeared to move closer to an agreement, the problem for both Obama and Boehner is whether they can convince their political colleagues to support a compromise. In the United States, Democrats have adamantly opposed any changes in Social Security, the pension plan for retirees, while Republicans have steadfastly stood against tax increases.