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Fed fears the cliff and Americans want resolution

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The U.S. economy is already seeing small adverse effects from the fiscal cliff impasse, but the crisis can still be resolved without any long-term damage, said Federal Reserve Chairman Ben Bernanke.

In a Dec. 12 press conference, Bernanke said existing impacts include a sharp drop in consumer confidence, decreased small business confidence, increased market volatility and weak business investments.

"All of these things, at least to some extent, can be traced to the anticipation and concern about the fiscal cliff," said Bernanke.

When asked if the Fed will take measures to ease going off the cliff, Bernanke said the spending cuts and increased taxes would hurt the economy no matter what the Fed does. "We cannot offset the full impact of the fiscal cliff; it's just too big given the tools that we have available."

Bernanke said he is confident a deal can be reached but is not certain of where talks are.

Neither Republicans nor Democrats have specified the status of negotiations, but polls show that Americans want a resolution and that they may be more inclined to agree with the president's positions.

A Bloomberg poll found that 65 percent of respondents say the Nov. 6 election gave President Obama a mandate on his proposal to raise tax rates on high-income earners and "to get it done." In the poll, 45 percent of Republican respondents agreed with those sentiments.

An ABC News/Washington Post poll (.pdf) found that 49 percent of respondents approve of the way Obama is handling the fiscal cliff talks while Speaker John Boehner (R-Ohio) only has a 25 percent approval rating.

The new NBC/Wall Street Journal poll (.pdf) finds that 76 percent of all respondents, and 61 percent of Republican respondents, say a tax hike on high-income earners is acceptable and that 65 percent of all respondents would agree to a resolution that included spending cuts in Social Security and Medicare as well as targeted tax rate increases.

Perhaps the most telling piece of news about the current state of affairs is a report from CBS News that Boehner told members of Congress not to make plans for Christmas.

For more:
- watch the press conference (embedded video)

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