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Transcript of IB Trends
Democrats & Republicans -Tax increase
*Financial market turmoil -Stalled negotiations "deleterious spillovers to the rest of the world"
-Fiscal cliff deep spending cuts ($110 billion) and tax hikes for 2013
-If federal debt ceiling couldn't be raised the risk of financial market disruptions would increase
-Loss in business/consumer confidence 1999 2012 2006 Barack Obama John Boehner Key Players: What "Fiscal Cliff" The Holdup Moving Forward seeks to pressure republicans over tax cuts for middle class NOV 28 President Obama has launched a new campaign, this one designed to trumpet his plans to avoid the "fiscal cliff" -- and to pressure Republicans into backing it Boehner and other congressional Republicans say the higher rates will kill jobs and slow economic growth. They have proposed new revenues through the elimination of tax loopholes and deductions -- and noted on Wednesday that Obama once agreed with their approach. Beyond tax hikes and budget cuts, President Obama and the Republicans added another element Wednesday to the "fiscal cliff" standoff: the debt ceiling. DEC5 President Obama continued to sell his debt reduction plan, this time by warning Republicans he would not hold the debt ceiling hostage to future negotiations. Canadian Markets -Decrease in trade
-Slow down in demand affects Canadian manufacturers/ exporters
-76% of Canada's exports go to US
-US contracting economy
-Therefore, decrease in Canada's economic turnout
-Raises risk for Canadian recession
-However, damage can be limited 1999 2012 2006 -Challenging for Republicans and Democrats to compromise on taxes and spending
-Consequences: 536 billion in tax increases and 110 billion in spending cuts
-Combination of "showdowns" between lawmakers
-National debt is soaring
-Path is unsustainable -Boehner: higher taxes
-Republicans: Insisted on deeper spending cuts, wanted to bring long term debt under control: reducing medicare and social security -Metaphor
-Effects of US spending cuts, federal tax increases and reduction in the US budget deficit
-End of 2012/ early 2013 DEMOCRATS Wordles Ben Bernanke stated that if lawmakers can't negotiate a deal then "the economy will, I think, go off the cliff". Result of No Agreement Going over the Cliff -sudden blow to the economy
-budget cuts affecting federal government
-tax payers in sudden shock
-payroll taxes increase
-income tax increase Continued >Single Parent/2 kids/37000 a year: $2800 tax increase
>Average family: $3500 tax increase
>Married/kid in college:
$8000 tax increase
>Wealthy/ $53 million income (athletes etc):
$2.4 million tax increase
-2 million unemployed citizens would lose unemployment aid -Nobody will get exactly what they want
-The American and World Economies should not be impacted from leaders that couldn't perform their jobs
-Short term fix
-Debt, spending, social security will still be long term problems REPUBLICANS "If the US sneezes, the global markets get the flu. But what happens if the US markets catch the flu?" Continued Contraction of US economy from: -Cut in federal spending
-Less take home pay (US dependant on consumer spending) US- Primary Driver on Global Economy -Going over the Fiscal Cliff: world market slow down Senator Reid
(Top Democrat in Congress) Timeline of Events Nov 28 Dec 11 Dec 4 Dec 12 Dec 18 Dec 13 -Obama launched new campaign
-Pressure Republicans into backing up debt reduction plan (higher taxes on nations wealthiest) -House Republicans sent counterproposal to White House to avert Fiscal Cliff Obama to GOP 4.6 trillion deficit reduction proposal without raising tax rates Obama/Boehner want specifics -Obama wants precision on higher taxes on wealthy
-Boehner awaits more details on spending cuts New Fiscal Cliff Offers traded -Republicans demand more from Obama on spending cuts (stalled negotiations) Still Waiting -After meetings, planning, calls no decision has been made
-Complaining about opposing side Boehners "Plan B" rejected -Cut spending
-Raise taxes on $1 Million + incomes
-White House never approved Congressional Leaders met at White House -Productive yet nothing final Dec 28 Jan 1 -Obama called on House of Representatives to follow Senate to pass deal
-Would be first important bipartisan tax increase since 1990 Going over the Fiscal Cliff A slide back into US recession would harm Canada because: "It would wipe out economic growth in Canada."
-TD Bank economost Craig Alexander Background
-US: House of Representatives and Senate
-House of Representatives: Republican -Raised taxes on individuals incomes
-Extended Spending As of Jan 2 Congress passed the bill Details: Ben Bernake -Canada: House of Commons and Senate US Senate Canadian Senate Decision Hargro, Tory. "Obama, Boehner Trade New Fiscal Cliff Offers." USA Today. Gannett, 12 Dec. 2012. Web. 02 Jan. 2013.
GOOD, CHRISTOPHER, SUNLEN MILLER, JOHN PARKINSON, JONATHAN KARL, DEVIN DWYER, and MATTHEW LAROTONDA. "As Fiscal Cliff Nears, All Eyes Turn to the Senate." ABC News. ABC News Network, 29 Dec. 2012. Web. 02 Jan. 2013
Albert, George. "As US Fiscal Cliff Looms, the Markets Will Be Jittery." Latest News: Breaking/Live News Today, Latest News India, Politics News, Business/Stock Market News, Sports Updates, Bollywood News and Opinions. N.p., 29 Dec. 2012. Web. 02 Jan. 2013.
"Business." Canada Should Survive 'fiscal Cliff' The Canadian Press, 22 Dec. 2012. Web. 02 Jan. 2013.
"United States Fiscal Cliff." Wikipedia. Wikimedia Foundation, 01 Mar. 2013. Web. 02 Jan. 2013.