The so-called fiscal cliff is actually a package of tax hikes and spending cuts that are scheduled to kick in at the beginning of 2013. As House Speaker John Boehner (R-OH) and President Barack Obama continue negotiations to keep the nation from falling over that economic cliff, economists are weighing in on the outcome of the decisions Congress is making.

Let all the tax hikes take affect and the U.S. could plunge back into recession. Do away with them and the nation’s soaring deficit goes higher.

So, what is Congress to do? A GOP proposal includes a $800 billion saving in revenue by closing loopholes in the tax code. The White House proposed a deficit reduction plan to accelerate an overhaul of the corporate tax system. 

The corporate tax plan was part of a larger package that included $1.4 trillion in new tax revenue, which was reduced from the initial White House offer of $1.6 trillion, according to GOP sources in the House. Details about the corporate tax proposal were not disclosed, but the administration has previously offered a blueprint for a tax code rewrite that would reduce the corporate tax rate from 35 percent to 28 percent.

Although the administration has not offered specific details about how it would pay for the rate reduction, it has put forward several options, including scaling back the system in which businesses can deduct assets at an accelerated rate and by limiting the deductibility of interest. Both changes would have a significant impact on a wide range of industries.

Before this latest development in the talks of the looming fiscal cliff, President Obama had not offered a timetable for when he planned to tackle a corporate tax overhaul, suggesting only that it was something that he would like to accomplish in his second term. Offering to undertake a tax code rewrite in 2013 comes as the White House is trying to win over business groups to its vision of a fiscal cliff solution as the administration tries to convince Republicans to accept tax rate increases on high-income earners.

A proposal to reduce the corporate tax rate is a “red herring,” according to a spokesman for Rep. Boehner, because many small businesses don’t pay the corporate tax but benefit from tax breaks that could be eliminated under the administration’s plan.

Rep. Pat Tiberi (R-OH), a senior tax writer, told reporters that the president had moved the revenue target to $1.4 trillion but had not given enough either in terms of reducing that number or making specific spending cut proposals.

“The difficulty the speaker is having is he understands something has to get done, but the president has to give something on spending. That’s the problem, on spending,” Rep. Tiberi said. “Right now, [Pres. Obama is saying], ‘Let’s increase the revenue, let’s spend more, and we’ll talk about spending cuts later.’ Nobody believes that later will come.”