As the lame duck session of Congress kicks off today, lawmakers are already showing signs of compromise on deficit reduction. Democrats are beginning to embrace an idea proposed by Republican presidential candidate Mitt Romney during the campaign, which would raise taxes on the rich through a hard cap on income tax deductions. The proposal is similar to an idea previously put forward by President Obama, which would limit income tax deductions to 28 percent. - Read more at The New York Times
NO WHITE HOUSE INVITE FOR WALL STREET President Obama invited the usual roster of business leaders to the White House on Wednesday to brainstorm solutions to the fiscal cliff, but Wall Street executives were not invited.
Politico’s Ben White reports in Morning Money, “The list for Wednesday's CEO meeting with President Barack Obama on the fiscal cliff does not include a single banker and only one person - Kenneth Chenault of American Express - from the financial services industry. Chenault is a fixture at these White House meetings, which have amounted to little more than photo ops in the past.”
According to a White House official, the Wednesday meeting is not the only time the president plans to meet with business leaders to discuss the fiscal cliff and deficit reduction. - Read more at Politico’s Morning Money
BUSINESS LEADERS PREPARE CONTINGENCY PLANS, LAYOFFS Business leaders meeting with the president this week say they are preparing fiscal crisis contingency plans that include layoffs, and are waiting for cues from Washington on how to proceed.
Mark Bertolini, chief executive officer of Aetna Inc, a Connecticut-based health insurance company, is among a dozen business leaders meeting with President Obama this week. Bertolini said his company is already preparing for layoffs if Congress and the Obama administration fail to cut a deal to avoid spending cuts and tax hikes set to take effect at the beginning of next year.
“Businesses have never sat on so much cash as they’re sitting on now–and there’s a reason for that: they’re worried about where the economy’s headed. What we don’t want to be is caught in a situation like we were caught in 2008 where we’re worrying about where the economy is going and how to keep our businesses afloat,” Bertolini said.
Bertolini is a member of the Fix the Debt campaign which has supported the 2010 deficit-reduction package created by Republican Alan Simpson and Democrat Erskine Bowles, which called for a combination of tax increases and spending cuts to reduce the deficit. - Read more at The Wall Street Journal
FISCAL UNCERTAINTY CONTINUES TO WEIGH ON MARKETS The economic uncertainty surrounding the fiscal cliff continues to weigh on the markets as the end of the year deadline approaches for Washington to reach a deal on deficit reduction. This morning, yields on 10-year Treasuries fell to 1.586 percent from 1.613 percent in late U.S. trade on Friday. The Treasury markets were closed Monday for Veterans Day. Yields on 30-year Treasury bonds went up to 2.72 percent from 2.751 percent on Tuesday.
A trader told Reuters that most investors anticipate that markets will continue reacting to the uncertainty of U.S. fiscal matters until Washington reaches some sort of deal on deficit reduction. "The (Treasury) market is probably at risk of some positive developments, if there's some easing of the political deadlock in the U.S. but again I don't expect anything to be resolved any time soon. As long as the fiscal cliff remains an issue that's negative for business and equities and positive for bonds,” a trader said. - Read more at Reuters
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