WASHINGTON: President Barack Obama and House Speaker John Boehner are signalling they’re open to some compromise on a taxes and spending to prevent more financial pain in the new year, but the two sides are digging in on raising taxes for wealthier Americans.
But the president insists his re-election gave him a mandate to raise taxes on wealthier Americans.
Besides, in his Saturday address to the nation, Obama urged Congress to immediately extend a tax cut for middle-class Americans, arguing the move will give 98 per cent of families and 97 per cent of small businesses the certainty that will lead to faster economic growth.
“This is something we all agree on,” the president said in his weekly radio and Internet address.
“Even as we negotiate a broader deficit reduction package, Congress should extend middle-class tax cuts right now.
“It’s a step that would give millions of families and 97 per cent of small businesses the peace of mind that will lead to new jobs and faster growth.”
On Friday, Obama invited top Republican and Democratic leaders to the White House next week for talks focused on averting the so-called “fiscal cliff.” Such a cliff would represent a catastrophic blend of automatic tax hikes and harsh defence and domestic spending cuts that are due to kick into force on January 1, if no other decision is made and approved by Congress.
The showdown will be a crucial test of whether the newly re-elected Obama can bend gridlocked Washington to his political will, with implications for his capacity to enact an ambitious second term agenda.
Obama campaigned on raising taxes on families earning $250,000 a year or more to pay for deficit reductions and to fund education spending and other plans to boost the economy and improve life for the nation’s middle class. But congressional Republicans have opposed tax increases of any kind.
In his address, the president he was not willing to compromise on this issue.
“This was a central question in the election,” he said.
“And on Tuesday, we found out that the majority of Americans agree with my approach — that includes Democrats, Independents, and Republicans. Now we need a majority in Congress to listen.”
“The majority of Americans agree with my approach,” said Obama, brimming with apparent confidence in his first White House statement since securing a second term.
The White House said that the president would veto any bill that called for an extension of the George W. Bush era tax cuts for the two per cent of Americans earning more than $250,000 a year.
But Republican House Speaker John Boehner warned in his address the tax increase would destroy more than 700,000 American jobs.
“Instead of raising tax rates on the American people and accepting the damage it will do to our economy, let’s start to actually solve the problem,” Boehner said.
“Let’s focus on tax reform that closes special interest loopholes and lowers tax rates.” Trouble is, the Republicans who run the House plainly do not agree with his plans.
Obama invited the top four leaders of Congress to the White House next week for talks, right before he departs on a trip to Asia.
The CBO analysis says the looming combination of automatic tax increases and spending cuts would cut the massive US deficit by $503 billion through next September, but that the fiscal austerity would cause the economy to shrink by 0.5 per cent next year and cost millions of jobs.