The Democrats want a combination of spending cuts and tax increases. Both the Republicans and Democrats are trying to find a way to solve this problem. If they don’t solve this problem $600 Billion in tax hikes and automatic federal spending cuts would take effect at the end of December, which can be devastating for the economy. The Democrats think that by raising taxes on wealthy Americans will help end the fiscal cliff. The Republicans don’t think the same. The President Barack Obama thinks that tax rates on incomes over $250,000 should be allowed to increase. The democrats are willing to take ideas from the republicans and try to fix this problem before 2013. Other ideas that the Democrats have are to raise enough revenue to curb the deficit without increasing the top tax rate.
The Republicans in other hands favor to that the solution comes in cutting federal spending. The Republicans think that the increase should also come by closing loopholes rather than raising tax rates. Also they are open to revenue-boosting changes to the tax code. Other ideas of the Republicans to fix this issue are to reduce the annual inflation adjustment to Social Security and rising the eligibility age for Medicare, something that a lot of Americans need. The republicans insist that higher tax revenues be paired with cuts to rapidly growing programs such as Medicare and the Medicaid health care program for the poor and disabled.