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Still a Chance for a Fiscal Cliff Deal

December 25, 2012

In the short term, we expect no significant developments until at least December 27. The House is in recess and has set no definite date for returning, but members of Congress have been told to expect to return to Washington late next week.
-Michael Townsend, vice president, Charles Schwab & Co., Inc.

Key points

  • House Speaker John Boehner's "Plan B," which would have extended Bush-era tax cuts for all taxpayers earning less than $1 million per year, failed to garner sufficient Republican support and wasn't introduced for a vote in the House of Representatives.
  • The House is in recess and the Senate will recess until next Thursday, so significant developments aren't likely until at least December 27.
  • A Democratic compromise proposal could pass the House if it gets near-unanimous Democratic support and support from as few as 3040 Republicans, and would likely pass the Senate as well.
  • The timing is tight, but we believe there's still time to reach an agreement by New Year's Eve.

Last night, Speaker of the House John Boehner (R-OH) pulled the plug on the so-called "Plan B" to avoid most of the tax increases associated with the fiscal cliff, refusing to allow the bill to come to a vote when it became clear that it would not achieve a majority. Plan B would have extended the Bush-era tax cuts for all taxpayers earning less than $1 million per year.



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