Chamber to Congress: Steer away from 'fiscal cliff'

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The lobby called on Congress to immediately enact legislation that would extend all the Bush-era tax rates as well as a slew of expiring tax breaks, and provide "relief" from the alternative minimum tax. The group also called for lawmakers to come up with spending cuts that would replace the automatic spending cuts set to take effect as part of last summer's debt-limit deal.

The business lobby's letter marks the latest plea from both sides of the aisle calling on Congress to adjust its policy to avoid the extreme fiscal swings. Federal Reserve Chairman Ben Bernanke has long called on Congress to address the matter, and the Congressional Budget Office warned in May that a failure to adjust policy would thrust the economy back into a recession.

With the campaign heating up, most in Washington expect these sticky issues will be postponed until after the election, during a hectic lame-duck session over the holidays. But the chamber warned that even putting off such decisions can inflict its own damage on an economic recovery that remains tenuous.

"The onset of harm to the economy will not wait until yearend," Josten wrote. "The very notion that the fiscal cliff exists has increased uncertainty, which has already begun to retard consumer spending and hamper business investment."

Even if Washington can come up with a way to avoid the policy problems set to take effect at the end of the year, the chamber said it was not enough. In addition, it called for a "firm" two-year deadline for policymakers to come up with a comprehensive tax reform plan, as well as a way to reduce spending on entitlement programs.

"America is accelerating toward a fiscal cliff while at the same time Congress and the President are ignoring a growing long-run fiscal imbalance," said Josten.

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