President Barack Obama warned of “prolonged negotiations” ahead as Republicans opponents of his plan to avert the fiscal cliff dug in.
In a campaign-style appearance Friday that used a toy factory as a backdrop, Obama said quick action by lawmakers to extend Bush-era tax cuts for middle-income Americans would give time for tougher negotiations on cutting spending to rein a budget deficit that has exceeded $1 trillion during each of the four years he’s been in office.
“In Washington, nothing’s easy so there’s going to be some prolonged negotiations,” Obama said in Hatfield, Pennsylvania, a facility of the Rodon Group that makes Tinkertoys and K’NEX building sets. “Where the clock is really ticking, right now, is on middle-class taxes,” he said.
House Speaker John Boehner, an Ohio Republican, also engaged the battle for public support, holding a news conference in Washington shortly after Obama spoke to say negotiations are at a “stalemate” because the administration hasn’t made a serious proposal for a compromise.
“Right now we’re almost nowhere,” Boehner said, adding that Republicans “are ready to work with the president.”
The dueling appearances followed Treasury Secretary Timothy Geithner’s shuttling among congressional leaders Thursday with a plan to trade $1.6 trillion in tax increases for $400 billion in unspecified entitlement-program cuts.
Republicans complained that the offer was little more than a rehash of old budget proposals, setting the stage for more contentious negotiations over the next several weeks as the year-end deadline approaches for the so-called fiscal cliff, more than $600 billion in spending cuts and tax increases that will be triggered unless Congress acts.
Obama wants Congress to extend existing tax rates for individuals making less than $200,000 a year and families with annual incomes of less than $250,000. He proposes raising rates for higher incomes as part a package of measures to close the budget gap.
Boehner refused to give on raising tax rates on high earners, saying that doing so would deal a “crippling blow” to small business and would draw “money away from our economy.”
Republicans also are seeking an overhaul of entitlement programs in exchange for raising tax revenue through other methods, such as limiting deductions. They want a higher Medicare eligibility age and an alternative yardstick for calculating inflation that would reduce Social Security cost-of- living adjustments, according to a Republican aide who wasn’t authorized to speak publicly.
The Congressional Budget Office has warned that if Congress doesn’t avert the fiscal cliff, the economy might slip into recession next year and boost the unemployment rate to 9.1 percent in the fourth quarter of 2013, compared with 7.9 percent now.
Obama and his allies argue that the president’s re-election to a second term demonstrates popular support for the idea of raising taxes on the top 2 percent of earners. That was “exactly” what Obama campaigned on, deputy White House press secretary Josh Earnest told reporters traveling with the president. It gives Obama sway in the negotiations, according to Representative Richard Neal, a Massachusetts Democrat.
“The leverage has shifted to the president,” Neal said in Washington.
“The people spoke in the election,” said Jack Hansen, a Democrat and a borough councilman in Lansdale, near Hatfield. “The people in this area will contact their congressional representatives and tell them to get it done.”
Boehner and Senate Republican leader Mitch McConnell of Kentucky accused Obama of extending his political campaign rather than negotiating. Representative Pat Tiberi, an Ohio Republican, said he’s frustrated with Obama’s approach.
“The president won 50 states and 75 percent of the vote,” he said. “That’s what they’re acting like.”
Still, Tiberi, a member of the tax-writing Ways and Means Committee, said Obama’s strategy may be working: “We’re getting our socks cleaned by the president in the PR war.”
As part of the administration’s campaign for public support, Geithner also will appear on the five main Sunday news interview shows, on NBC, ABC, CBS, Fox and CNN. Next week, Obama will meet with a group of governors on the fiscal cliff and address the Business Roundtable, Earnest said. Geithner met separately yesterday with each of the top four leaders in Congress in their first direct talks since Obama hosted the leaders Nov. 16 at the White House.
Geithner’s offer, as described by two Republican aides, is based on Obama’s fiscal 2013 budget and his 2011 proposal to the deficit-cutting supercommittee, which last year didn’t come up with a plan all sides could accept.
It would raise taxes for top earners by $1.6 trillion over the next decade with higher rates on income, capital gains, dividends and estates, along with limits on tax breaks. It would call for about $400 billion in cuts to entitlement programs, which Republicans have deemed insufficient.
The plan would either extend or replace a payroll tax cut that is set to expire at the end of the year, according to the Republican aides. It would protect millions more people from having to pay the alternative minimum tax and defer by a year the federal spending cuts set to start taking effect in January.
The administration hasn’t taken a public position on the extension of the payroll tax cut, which reduces employees’ share of the tax for Social Security to 4.2 percent from 6.2 percent. The current break, which started in 2011, expires Dec. 31.
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