Treasury Secretary Timothy Geithner indicated that tax rate increases on the top 2 percent of households in the country must be part of any final agreement to avert the fiscal cliff. This has been a point of contention in the negotiations and it now appears that both sides are still far apart on reaching a compromise. This increases the likelihood that the tax increases and spending hikes will go into effect. The current offer by the administration includes $1.6 trillion in tax increases over 10 years, $50 billion in new stimulus spending and around $400 billion in total entitlement spending cuts. For perspective, the annual budget deficit is in excess of $1 trillion.
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