White House chief of staff Jack Lew predicted Wednesday that congressional Democrats and Republicans will come together after the Nov. 6 election on a plan to avoid the fiscal cliff of higher taxes and spending cuts scheduled for 2013.
"Where I'm optimistic is, because there is going to be a crisis if we fail to act, it will hopefully bring us back to the kind of (bipartisan) engagement that's in the best interest of the American people where everyone will work together on a balanced approach," Lew told the Chicago Tribune editorial board in a conference call from Washington.
Lew's optimism came as Bank of America Merrill Lynch's Fund Manager Survey showed investors displaying more concern that the country would hit the fiscal cliff than over European monetary woes. The Congressional Budget Office has said that if lawmakers fail to act, the fragile U.S. economy would go into recession.
The fiscal cliff is the double whammy that would occur if a variety of tax cuts, including those enacted during President George W. Bush's administration, were allowed to expire. At the same time, more than $1.2 trillion in spending cuts -- a process known as sequestration -- would go into effect involving domestic and defense spending because of lawmakers' failure to reach a deal on deficit reduction.
Republicans who control the House have fought against efforts by President Barack Obama's administration to allow the Bush-era tax cuts to expire on income above $250,000 as part of a mixed deficit reduction package that also includes spending cuts.
"This is not rocket science. Everyone who works on these issues has known where the choices are for a very long time," said Lew, who replaced William Daley as chief of staff after serving as director of the Office of Management and Budget.
Citing the issue of sequestration, Lew said a "thing like a fiscal cliff actually may be the only way to kind of get Congress to make the kind of decisions that have to be made."
"The challenge of avoiding a tax increase on all working Americans is something that is not a partisan issue. Democrats and Republicans alike don't want to see taxes going up on all working Americans," he said.
David Axelrod, the Obama campaign's senior adviser, said he believed "there is a recognition on the part of people in both parties, not necessarily all people in both parties," that they must deal with the fiscal cliff. But Axelrod contended a win by Republican Mitt Romney might result in less of a sense of urgency to deal with the issue by some GOP members who would want to wait until the new president takes office.
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