The political class has been deeply worried about how to get the country to recover from its deep deficit. Democrats have now made their stance on fighting the deficit clear. They say they can reduce the deficit by $1.85 trillion in the next decade with a combination of tax rate increases and spending cuts. Republicans have introduced spending cuts as the only method to fighting the deficit, with talk about closing loopholes within the tax code as a way to bring in more revenue without having to increase tax rates. Neither side agrees to each proposed plan.
However, both the parties will need to come to an agreement if a workable solution to the fiscal deficit is to be carried out. In the process of agreement and its outcome, not only is the future of the U.S. economy to be considered, but also the power that each party gains from it.
After avoiding the fiscal cliff, the focus will be to get the economic recovery moving at a faster pace, and cutting down the deficit, without putting an unnecessary burden on taxpayers. Republicans are contemplating making deep cuts to healthcare and other social programs that are the main drivers of the debt, as a way to curb the substantial costs of those programs but that will affect common taxpayers, especially the poor. Democrats largely disagree with the cuts proposed but have not found a clear path to making a deep dent in the deficit without them.
The expiration of payroll taxes made headlines because it affected most American taxpayers. So politicians are careful to consider the effect their policies will have on average Americans, and how the public will perceive them.
In this economic climate, any move by either political party will be made after much consideration and strategy. Gaining political points while getting the economy to recover is the goal of both the parties but that goal is keeping Washington from coming to an agreement, with time quickly running out.