The Free Press, Mankato, MN

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November 29, 2012

Obama, Republicans start verbal battle on fiscal cliff

(Continued)

The document, obtained by The Associated Press, states that achieving revenue gains by limiting deductions rather than by letting rates rise for the wealthy "would inevitably force any tax reform designed to further reduce the deficit to raise taxes on middle class families simply to preserve lower rates for the most fortunate."

Republicans are also demanding significant cuts to entitlement programs like Medicare, such as an increase in the eligibility age for the program from 65 to perhaps 67.

As for the "fiscal cliff," across-the-board cuts to the Pentagon and domestic programs set to strike the economy in January along with the expiration of Bush-era tax cuts on income, investments, married couples and families with children. That combination of tax increases and spending cuts would wring more than half a trillion dollars from the economy in the first nine months of next year, according to the Congressional Budget Office.

No one anticipates a stalemate lasting that long, but many experts worry that even allowing the spending cuts and tax increases for a relatively brief period could rattle financial markets.

From their public statements, Obama and Boehner appear at an impasse over raising the two top tax rates from 33 percent and 35 percent to 36 percent and 39.6 percent. Democrats seem confident that Boehner ultimately will have to crumble, but Obama has a lot at stake as well, including a clear agenda for priorities like an overhaul of the nation's immigration laws.

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Associated Press writers Jim Kuhnhenn and Julie Pace contributed to this report.

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