Tough Talk, No Answers As Us 'fiscal Cliff' Looms

A sense of deja vu gripped Washington Monday as Democrats and Republicans locked in who-blinks-first brinkmanship over taxes and spending, with pundits warning of economic chaos unless a deal is struck.

US President Barack Obama speaks at the White House in Washington on November 28. A sense of deja vu is gripping Washington as Democrats and Republicans are locked in who-blinks-first brinkmanship over taxes and spending, with pundits warning of economic chaos unless a deal is struck.

The White House will not budge on tax hikes and Republicans call the president's opening gambit ridiculous, but without a deal by the year's end the fragile US economy will plunge off what is being called "the fiscal cliff."

"I think we're going over the cliff," grimly predicted Republican Senator Lindsey Graham of South Carolina.

Appearing Sunday on CBS's "Face the Nation" show, he said he was ready to consider closing tax loopholes for the richest Americans, but only in conjunction with entitlement reform aimed at saving such programs as Medicare, Medicaid and Social Security from bankruptcy.

But Graham insisted that the president's plan when it comes to entitlement reform "is just, quite frankly a joke."

In April 2011, there were less than two hours to go to avert a government shutdown when the same protagonists, Democratic President Barack Obama and Republican House Speaker John Boehner, struck a tentative budget deal.

The hard-fought accord that eventually raised the debt ceiling later that summer came too late to prevent Standard & Poor's from downgrading the credit rating of US government bonds for the first time in the country's history.

Despite international criticism then for playing a dangerously irresponsible game of chicken, both sides are at it again refusing to compromise and counting down the clock as financial disaster looms.

The debt ceiling deal signed into law in August 2011 included a poison pill provision that would usher in across-the-board spending cuts unless Congress passed a $1.2 billion deficit reduction bill by the end of 2012.

Combined with the expiry on December 31 of a raft of tax cuts, including reduced Bush-era rates for nearly all Americans and Obama's two percent cut in payroll taxes, the risk of a new recession is very real.

The point of the "fiscal cliff" provision was to force a fiercely divided Congress and White House to stop kicking the can down the road and get serious about tackling the $16.3 trillion public debt and arcane tax laws.

Obama...