A plan favored by US President Barak Obama to avoid the fiscal cliff, which is a combination of spending cuts and tax hikes, calls for the tax cuts for those making more than $250,000 to be scrapped.

Several sections in the US are urging the American lawmakers to arrive at a plan to avoid the fiscal cliff. If the there is not agreement to resolve the situation, a series of spending cuts and tax hikes will automatically take affect from 2, January, 2013. Republicans in the US congress are opposing tax hikes for highest earners and are proposing increasing tax revenue without raising tax rates by limiting tax deductions and closing loopholes.

Ben Bernanke, the chief of US Federal Reserve has warned the country’s politicians, who are deliberating over the issue of fiscal cliff, over the risks posed to the fragile economic recovery in the US economy.

President Barack Obama and congressional leaders have both said that they are committed to address the issue by reaching an agreement in time. The discussions on the matter are expected to go on in the month of December. Mr. Bernanke is urging the government and lawmakers to come to an agreement sooner to help boost economic growth and relieve pressure from the economy.