Driving the Day: 12/19/12

Dec 19, 2012

This will be the last edition of Driving the Day as we adjust our content to better meet our readers’ preferences.

Need to know…

  • Boehner Announces “Plan B” to Avoid Tax Hikes. With slow progress in negotiations over the looming fiscal cliff, House Speaker John Boehner announced a "Plan B," legislation that would avoid the tax increases set for the end of the year. If passed, the plan would extend tax rates for tax payers earning $1 million or less a year, increasing the top marginal tax bracket to 39.6%. The plan would not, however, address the debt limit, sequestration or unemployment benefits. Such a plan would likely pass the House, but it would not pass the democratically controlled Senate. A House vote on the plan is expected this week.
  • U.S. Trade Imbalance Lowest Since 2010. The U.S. current account trade deficit fell to $107.5 billion in the third quarter, the lowest level since 2010, reports the Commerce Department. The Q3 imbalance is down 9% from $118.1 billion last quarter. The current account tracks commerce and investment flows between nations, which is an indicator of how much the United States will borrow from abroad. Some economists think this drop in the deficit will be short lived, with the continued global economic slowdown hurting demand for U.S. exports and potentially swelling the country's trade imbalance in the coming months.
  •  “Fiscal Cliff” Failure Could Hurt U.S. Credit Rating. The ratings firm Fitch says the United States could lose its AAA credit rating if the federal government is unable to address spending reduction and tax increases before the end of the year. The firm's 2013 global outlook notes failure to avoid the fiscal cliff would increase uncertainty and throw the country into a recession. Fitch reports a negative current outlook on the U.S. sovereign rating and could potentially follow the 2011 AAA downgrade implemented by its rival rating firm Standard & Poor's.

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