Fiscal Cliff: Is Hiking Taxes on Wealthy the Answer?

Congress returned to Washington today for a lame duck session that could be filled with great drama and accomplishments or bitter disappointment. Our lawmakers have exactly five weeks to agree to a plan to avoid nearly $700 billion in tax increases and spending cuts—a.k.a. the "fiscal cliff"—that are set to take effect on January 1, 2013.

Republican House Leader John Boehner has indicated he's open to raising revenues but continues to nix the idea of raising the marginal income tax rate for wealthy.

"Raising tax rates is unacceptable," Boehner, R-Ohio, told Diane Sawyer last Friday, days after the presidential election.

Former Romney campaign economic advisor Glenn Hubbard, who's also dean of Columbia Business School, suggests that revenues be raised first by closing loopholes on upper-income taxpayers, rather than hiking their marginal tax rates.

President Obama, in his first national post-election remarks last week, repeated calls for a "balanced approach" that includes spending cuts, which Republicans favor, but also tax increases for those earning more than $250,000 a year.

"If we're serious about reducing the deficit, we have to combine spending cuts with revenue — and that means asking the wealthiest Americans to pay a little more in taxes," said Obama.

Related: Ralph Nader's Advice to Obama: "Stand Firm" on Fiscal Cliff

The president meets with union leaders today and business leaders tomorrow to garner support for his approach, and meets with Congressional leaders on Friday. Union leaders support his balanced approach but many CEOs to the nations largest businesses are not necessarily on his side.

In his meetings this week, the president hopes to persuade Republicans in Congress to accept higher taxes on wealthy American while he works to persuade Democrats to agree to spending cuts in entitlement spending.

In today's New York Times former Clinton Treasury Secretary Robert Rubin endorsed a balanced approach. " We should let the Bush high-end tax cuts expire, with an achievable, progressive reduction in tax expenditures," writes Rubing. "And we should have spending cuts, including entitlement reforms, equally matched by revenue increases."

Can Congress and the White House come to some type of agreement on taxes and spending that will avoid going over the fiscal cliff?

Related: Congress Will Come to 'Reasonable Agreement'?

The Daily Ticker's Henry Blodget is optimistic.

"The only question for Republicans is do you want to block a middle class tax cut? …(Republicans) are not going to block a tax cut on the middle class," says Blodget.

The Daily Ticker's Aaron Task is not as confident, at least initially. He says House Republicans will "vote down any tax increase on anybody" at least on the first go-round.

Stay tuned and in the meantime tell us what you think!

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