Menu

Politics

Obama holds firm to tax hikes as he invites Hill leaders to talks on 'fiscal cliff'

 

President Obama, claiming his election "majority" was a vindication of his fiscal policy, held firm Friday to his intention to include tax hikes for America's top earners in any negotiations with Congress to pull the nation back from the so-called "fiscal cliff." 

The president, in his first remarks from Washington since winning a second term, urged officials to "get to work" on the issue as he invited congressional leaders to the White House next week. He said he's open to "compromise," but did not appear to budge on what has been a central disagreement over the last two years -- whether to extend the Bush-era tax rates for everyone, or to let them lapse for households making more than $250,000. 

"I refuse to accept any approach that isn't balanced," Obama said Friday. "This was a central question during the election ... and on Tuesday night, we found out that a majority of Americans agree with my approach." 

"Our job now is to get a majority in Congress to reflect the will of the American people." 

While Obama did not explicitly mention the $250,000 threshold, White House Press Secretary Jay Carney later said the president would veto any bill that extended the current rates for that group. Carney also announced that Obama will hold a press conference next Wednesday ahead of the meeting with Hill leaders. 

Taxes for everybody are set to rise Jan. 1 due to the expiration of the Bush tax rates and other measures. That, combined with the triggering of automatic defense and domestic spending cuts, amount to what is known in Washington as the "fiscal cliff" -- an austerity blow so severe that a Congressional Budget Office report warned this week that it would cause a recession and drive unemployment up to 9.1 percent. 

Officials in Washington, then, are scrambling to come up with an alternative plan that would avert the "cliff" while still pursuing a deficit-reduction package. But time is running out, and House Speaker John Boehner shortly before Obama's remarks called on the president to take the reins. 

"This is an opportunity for the president to lead," Boehner said late Friday morning. "This is his moment to engage the Congress and work towards a solution that can pass both chambers." 

Boehner had already telegraphed that he wants the president to be in the driver's seat on a deal, and not pass the tough decisions to Congress. "We're ready to be led," he said earlier in the week, shortly after Obama won re-election. 

Boehner on Friday disclosed that he had a "short conversation" with Obama earlier in the week. After a year when Obama rarely met with Republican leaders on Capitol Hill, Boehner made clear that he expects more engagement in order to resolve the "fiscal cliff" crisis before the end of the lame-duck session. 

The speaker was likewise holding firm to his demand that tax rates not go up, because many of those affected are small business owners. "Raising tax rates will slow down our ability to create the jobs that everyone says they want," Boehner said.   

Boehner, though, has said he's willing to accept "new revenue" -- perhaps by closing loopholes and other deductions -- as part of overall tax reform in exchange for serious entitlement cuts. 

It is possible that this could be the entry point for some semblance of a compromise. Obama mentioned Boehner's comment Friday, saying he was "encouraged" that the speaker was open to exploring new revenue. 

Senate Democratic Leader Harry Reid, though, put out a brief statement Friday simply urging Republicans to come around to the Democrats' way of thinking. 

"The sooner Republicans come to grips with this reality, the sooner we can forge an agreement to avoid the fiscal cliff and prevent a tax hike on middle class Americans," he said. "The Senate passed a bill to cut taxes for Americans making less than $250,000, and the House should pass it immediately. Our bill cuts taxes for small businesses. When Republicans talk about small businesses, they are really trying to protect millionaires like Donald Trump."

Reid's Republican counterpart, Minority Leader Mitch McConnell, countered by saying "there is no consensus on raising tax rates." 

Obama continued to emphasize Friday that he doesn't want a deficit-reduction plan to center on spending cuts. 

"We can't just cut our way to prosperity," he said. "We have to combine spending cuts with revenue. ... That means asking the wealthiest Americans to pay a little more in taxes." 

Boehner has suggested a "bridge" bill to avoid the "cliff" in the short term and allow for a bigger deal in 2013. 

If Congress and the White House cannot reach any deal by the end of December, taxes will go up for everyone. According to the CBO, all the measures combined would shrink the economy next year by .5 percent.