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Is a plunge over the Fiscal Cliff inevitable?

All eyes have been on Washington in recent weeks in hopes that Congress and President Obama would reach a deal to avoid sending the country over the Fiscal Cliff. Hopes were high, but with time running out, it appears as though no deal will be reached and the nation is indeed going to go over the cliff.

Economists are generally in agreement that the planned tax hikes coupled with scheduled budget cuts will send the nation into another recession unless some sort of deal is reached, but the divide between Republicans and Democrats appears to be too great to overcome.

Frustration has been growing, and today Democratic Senate Majority Leader Harry Reid took his frustrations out the Senate floor. Reid placed blame for the lack of a deal squarely on the shoulders of the Republican Party and in particular the Speaker of the House John Boehner. He noted that the Senate acted weeks ago, but Boehner has been acting in a manner that shows he cares more about keeping his position as Speaker than he does about saving the country from the Fiscal Cliff.

Reid pointed out that the Democrat-controlled Senate had already made a big concession to extend the Bush-era tax cuts on households making less than $250,000 a year, and urged Boehner to “take the escape hatch“.

Of course, Boehner has a different view of the situation. He contends that House Republicans are not to blame, that it is actually the Senate which has failed to do what it needs to do to keep the country from going over the cliff. His claims come despite being unable to get enough votes last week to pass a measure to extend tax cuts on all households except those earnings over $1 million.

Democrats balked at the measure because it did not raise the amount of revenue they wanted, and Republicans did not vote in its favor because too many believe that tax breaks should remain intact for everyone.

Michael Fowlkes

Michael Fowlkes is a financial writer who has been with the Fresh Brewed Media family since 2004. Over the course of his tenure with Fresh Brewed Media, he has worn many hats, including portfolio manager, options analyst, and writer. Michael received his undergraduate degree from Virginia Tech in Accounting and got his start in finance working as a stock trader for six years at Chase Investment Counsel in Charlottesville, Va.