Tax Cuts, U.s. Economy | featured news

Financial markets would be affected adversely if U.S. lawmakers fail to agree on a "fiscal cliff" deal before Tuesday, President Barack Obama said in an interview broadcast on Sunday, while urging Congress to act quickly to extend tax cuts for middle-class Americans.

Congressional leaders of both parties will meet with the president in an effort to reach a deal to avoid across-the-board tax increases and spending cuts that could push the economy into recession.

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.

Economists Betsey Stevenson and Justin Wolfers write that “the debate in Washington about economic policy is phony. It’s manufactured. And it’s entirely political.” ... Turns out that there’s wide agreement that the stimulus created jobs, TARP was necessary, market factors drive gas prices, tax cuts reduce revenue, tax increases and spending cuts will have to be part of a deficit solution and more.

Democratic leaders called on Wednesday for new spending and tax cuts to boost the sluggish U.S. economy, setting up a fresh hurdle for bipartisan efforts to head off a government debt default this summer.