Spending Cuts, Tax Hikes | featured news

Fifty-three percent of Americans said Republicans in Congress would be more to blame if the government could not reach an agreement to avoid the combination of spending cuts and tax hikes set to take effect at the beginning of the year.

Amid a global fright over Washington's political brinkmanship, U.S. lawmakers return to the capital on Tuesday with a seven-week deadline to reach agreement on scheduled tax hikes and budget cuts that threaten to trigger another recession.

Flush with re-election vigor, President Barack Obama on Friday will provide his first public comments on the upcoming negotiations with Congress on how to deal with pending tax hikes and spending cuts that create the so-called fiscal cliff facing the economy at the end of the year.

The game of chicken over the nation's impending "fiscal cliff" — the automatic tax increases and spending cuts due if Congress fails to act by year-end — has officially begun. Congressional Democratic leaders made clear Monday that they had no interest in averting the bleak scenario if Republicans continued to refuse to soften their hard-line opposition to higher taxes on wealthier Americans.

President Barack Obama offered strong praise Tuesday for a deficit reduction plan put together by a bipartisan group of senators, calling the measure's mix of tax hikes and spending reforms "broadly consistent" with his own approach to the current debt ceiling crisis.

Republicans planned sharp cuts to foreign aid and education on Wednesday, while Democrats weighed a tax hike on millionaires, highlighting the yawning divide between the two parties in the budget debate.

The battle over whether tax increases can be used to cut the nation's debt flared Tuesday as the Senate's Democratic budget writer floated a possible millionaire's surtax to help cut projected deficits over the next decade. But Republican leaders flatly said no to tax increases....

President Barack Obama, two years into a presidency that increased spending to prime a weak economy, is turning his attention to the nation's crushing debt and trying to counter a Republican anti-deficit plan with a framework of his own that tackles politically sensitive health care programs while also increasing taxes....