Fiscal Cliff Talks Will Likely Target Medicare, Social Security, Programs For The Poor
WASHINGTON -- After bailing out a global financial crisis, enacting a series of major tax cuts for the wealthy and waging two unpaid-for wars, the U.S. government is some $16 trillion in debt. Now, in exchange for paying off a bit of that debt by returning some of the tax rates to their previous levels, Democrats have offered, in a series of high-profile negotiations, to slash trillions in spending, much of it hitting the elderly, the poor and the middle class. This process of transferring wealth up the economic ladder is known in Washington as a "grand bargain."
With the election over, Democrats and Republicans will soon be back at the negotiating table, driven there by the so-called "fiscal cliff" -- the moment in January 2013 when the Bush-era tax cuts expire and automatic cuts to defense and social programs take effect.
In order to avoid this scenario, President Barack Obama is proposing a grand bargain that would reduce the deficit by $4 trillion over 10 years, relying on a 3-to-1 mix of spending cuts and revenue increases.
Republicans, meanwhile, have rejected including new taxes, but are open to negotiations. What exactly will be on the table when the two sides sit down?