US budget talks hit standstill

City A.M. Reporter
US politicians last night remained deadlocked over dramatic, year-end tax increases and spending cuts known as the "fiscal cliff."

At the White House, small business leaders emerged from a one-hour meeting with President Barack Obama to voice support for his goal of extending low tax rates for the middle class beyond the end of the year, while letting rates rise for wealthier taxpayers.

Republicans want to extend low tax rates - enacted a decade ago under the administration of former Republican President George W. Bush - for all taxpayers, including households earning more than $250,000 a year.

Raising tax rates on the wealthy would discourage investment and hiring at a time of high unemployment, Republicans say.

Congressional Democrats allied with the president showed no sign of backing down from his stance on raising taxes for the wealthy.

With just a month left before the Bush tax cuts expire and automatic spending cuts begin to take hold, markets are anxious about predictions that falling off the "fiscal cliff" could trigger another recession.