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At the end of 2012, the U.S. economy was recovering from a deep recession. Federal budget deficits were soaring, and tax cuts for Americans of all economic levels were due to expire. Economists warned that letting the cuts expire could push the economy “off a fiscal cliff.”

President Obama pushed to continue the tax cuts for all but the wealthiest citizens. Congressional Republicans objected to any increase in taxes and called for deeper cuts in government spending.

President Obama and the Speaker of the House, John Boehner, were unable to reach an agreement that would satisfy conservative House Republicans. When these negotiations failed, the Senate Republican leader met with the vice president and crafted a compromise: Only Americans with incomes over $400,000 would face an increase in income taxes. A payroll tax cut for taxes that fund Social Security would be allowed to expire; federal unemployment benefits would be extended; and massive spending cuts would be delayed.

This compromise passed both the House and Senate, though most House Republicans refused to support it. On January 2, 2013, President Obama signed the American Taxpayer Relief Act into law.

·     What was the conflict described above between the president and Congress?

·     Do you think the underlying cause of the conflict was more philosophical or political? In your opinion, which type of conflict would be harder to resolve?

·     What steps were taken to resolve the conflict? Why do you think negotiations between the Senate Republican leader and the vice president were more successful than talks between the president and the Speaker?