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Obviously investors are increasingly concerned about the fiscal cliff (the automatic spending cuts and tax hikes due to take place at the beginning of 2013), so Goldman’s Alec Phillips is out with an update on where things stand.The answer: nowhere.
Weaker economic data and an increased public focus on the “fiscal cliff” has intensified pressure on lawmakers to reach agreement on the expiring policies ahead of the election and the pace of legislative activity on these issues looks likely to pick up this month. Nevertheless, an agreement still appears unlikely before the November election. In fact, while there are areas of agreement between the parties on the fiscal cliff, debate over the next month looks at least as likely to highlight the areas of disagreement.
There Phillips is alluding to the tax cut debate, which got off in earnest yesterday, when President Obama urged a swiftly-passed one-year extension on the tax cuts for income under $250,000. The GOP wants a full extension that includes the cuts on income over this level, and Obama has promised not to accept that.
So for now, don’t expect any movement or progress. It will all be fighting.
And realistically, it will all be fighting until the last minute of the lame-duck Congress.